Succession Planning – The Next Frontier

Succession PlanningWelcome to the graying of America’s financial advisors.  Thousands of independent advisors are slowly moving to retirement without a clear succession plan for their business. This is specifically a concern for the one or two person shops where there are no other advisors in the firm to assume the clients. For many advisors, the plan is to have no plan. This plan, or lack of plan, serves no one – not your heirs, not your clients and certainly not the client’s heirs.


Key Steps to Succession Planning:

Valuation – Have a clear understanding of what your practice is worth. This process needs to be void of emotion and focus strictly on the assets, growth and long term opportunityof the firm. In most cases an advisory practice will yield a higher value than a commission based practice. There are several firms that specialize in valuing and benchmarking independent practices (i.e. FP Transitions).

Good Faith – For most advisors their business is their life and servicing and doing the right thing for the clients is paramount. When working with a potential buyer it is important that the values you hold is shared by your successor.

Transition timeframe  Inside your agreement, insure there is a quantifiable timeframe for the buyer to transition. The definition of duties should be clear so that there is no question or ambiguity to the responsibilities of each party.

Continuity Planning – It is recommended that life insurance and disability insurance is structured to protect both parties during the transition .What happens in the middle of a three year transition if the seller or the buyer passes away or is incapacitated?

Non-Compete – It is important to include a non-compete clause for a specific period of time to protect the buyer from the seller potentially reentering the business.

So what is your plan?  Who in your office can do what you do? Who will cultivate your clients and understand them like you? And most importantly who will compensate you fairly based on the value of your practice?

Summit is working closely with industry experts to build out a succession plan with resources to help develop the next generation and insure your clients and heirs are taken care of.

For more information on FP Transitions and Summit Brokerage Services, visit or contact us at (800) 354-5528.

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