Advanced Continuity Plan for Your Advisory Firm
DEAR ADVISORS,
Exit planning might seem overwhelming, but we’ve made a quick checklist for you to follow, depending on where you are in your life and business. Whether you’re just starting out, or thinking about exiting, it’s your fiduciary duty to have an exit plan in place for your clients today.
Last week we talked about a Beginner’s Continuity Plan for firms less than 2 years old. This week is the next level - an Advanced Continuity Plan. This is like a Living Will with special clauses. It’s ideal for established businesses with an owner still years away from exiting. You don’t plan to go anywhere, but a basic continuity plan probably isn’t sufficient. An Advanced Continuity Plan includes:
Annual Valuation - An annual valuation forces you to update your client demographics annually, which is helpful for your Continuity Partner. FP Transitions offers the EMS Basic subscription which includes annual valuation updates for a reasonable fee. If something happens to you, your Continuity Partner can work with FP Transitions to get a suitable sale price for your business.
Additional Insurance - Once your firm is worth something, it’s time to get additional business insurance. If something happened to you, the firm would need enough cash flow to keep operating until the succession plan is completed. If your Continuity Partner plans to buy you out, they’ll need an insurance policy on you so they can afford to buy your firm and service your clients well through the crisis. If you’re listed as another advisor’s Continuity Partner, it’s a good idea to discuss getting insurance on them as well.
Update Personal Estate Documents - Now that your firm is worth something, it’s time to put your business interests in your trust. Without this, your business could be frozen until the probate process is completed. Most estate planning attorneys can do this without updating your trust, but you may want to add a clause to your trust regarding the business.
Next week we’ll give you a Beginner’s Succession Planning Checklist. Surprisingly enough, continuity planning and succession planning are completely different! Continuity planning is essential in case the unexpected happens. Succession planning is the planned transfer of the business to the next generation. If you’re starting to think about retirement, you’ll want to stay tuned for next week’s post on how a Beginner’s Succession Planning Checklist can secure the future of your family and your advisory firm!
Warm regards,
Brooklyn
P.S.
At Ellevate Advisors, we believe that advisors deserve to retire too. What does that look like for you, your family, and your business? Let’s figure it out together! Click here to schedule an initial phone call with our team today or get to know me on my bio here!