Succession planning

When is the right time to plan for your succession?

The thought of passing your practice on can be emotional and a challenge, no matter how far off it may be. Many advisors delay advisor succession planning because they feel too young or aren’t ready to think about retirement. Some also may think advisor succession planning doesn’t require a lot of time, and can be left until late in their career.

The reality is that you can never start soon enough – and you should review the plan often and update when needed. As a business owner, the success of your practice is integral to your financial security in retirement –and in the event of critical illness or death, the financial security of you and your loved ones.

Succession planning is one part of a larger process of financial security planning, and it shouldn’t take place in a vacuum. Your practice is your most valuable asset and as an owner, the financial stability and success of your business can directly affect your retirement plans and your family.

Benefits of advisor succession planning:

• Meet personal, business and retirement goals
• Choose the right structure and valuation for your practice
• Select the right talent to manage the practice
• Groom future leaders to run your practice

A good succession plan is made up of many components, all of which start with a readiness assessment. This exercise can help you see how you’re feeling about your practice and the topic of succession.

Start by asking yourself these questions:

• How much energy comes from my role as an advisor?
• Will I be OK with someone else doing my job?
• Will I miss the action?
• Will I miss the people?
• Will I miss the public profile?
• What will I do in retirement?

When you take the time to prepare your plan, it gives you an opportunity to address things like operating structure, maintaining growth, and functional activities in the organization.

You can start by considering some of the following questions:

• What is your vision and goal for the business after you retire?
• What is the state of your plan?
• If you were a buyer, would you consider buying your own practice?