3 Easy Tips to Starting Your Succession Plan

Dear Advisors,

Succession planning can feel overwhelming. It's a technically complex problem that impacts both your finances and your business. A business transition can also be emotional. There’s a lot riding on the shoulders of someone you can’t control. So how do you start planning for a successful business transition? Here are 3 tips that will help you start your succession plan today.

• A lot of advisors dream of finding the right successor. It’s natural to think that my successor should be like me. If they’re like me, they will be a good fit for my clients. They will think about my business the way I do. It will be easy for us to create the perfect succession plan together. But one thing is certain in every succession plan – your successor will not think about your business the way you do.

  I’m sorry to be the bearer of bad news, but there is no such thing as the “right” successor. You will never find that person. Instead of starting your succession plan by looking for the perfect person, you should start by studying yourself.

• Succession Planning is a lot like dating. When I started dating, my mom told me to make a list of my “rocks”. These were the relationship deal-breakers, and might be something like “being responsible with money”. Any person who didn’t have all the rocks on my list was simply not an option. My mom was completely right, and thanks to her, I’m now happily married! That’s how you start – make a list of the rocks that you require in your succession plan.

  What are your rocks, and how do you make sure you know what you and your family need from a succession plan? The best way to answer that is by working with an objective, unbiased advisor to help you and your spouse with your financial plan. This will help you come up with rocks like:

  • What do my spouse and I want to do in retirement?

  • How much do my spouse and I need to retire?

  • What is my retirement timeline?

• Succession Planning also involves hiring someone. Consider how this new advisor might fit at your firm before you start on a succession strategy. Start by writing a job description. Describe the office culture, as well as both qualitative and quantitative aspects of the advisory position. Think about the compensation packages you could reasonably offer. Make a note of your absolute salary limit, as well as any benefits that you would not be willing to provide.

  Once you have your job description, add the professional requirements to your list of rocks. It will be more difficult to hire someone you like when you know they’re not a good fit for any of those reasons.  If you aren’t finding a successor within your timeline, you can officially post the job description on your website or on advisory job boards.

Succession planning is a process. When your first attempt doesn’t work out as you expected, simply start again with these three steps:

• Stop looking for the perfect successor

• Do a financial plan with your spouse so you can list your personal rocks

• Write a job description for your successor so you can list the professional rocks

Taking any of those steps will put you on a path to a successful transition. You will make clear decisions based on what is needed. You will ultimately find a person who’s not perfect (none of us are!) but who is a good fit and is committed to making the succession plan work.

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 today.