Succession Planning: Why Financial Advisors Need to Plan for the Future

Building a financial advising business from the ground up is no small undertaking. As many veteran financial advisors know, it takes years upon years of developing your skills, growing your client base, and perfecting your trade to become a trusted and sought-after financial advisor. And just like it takes time to establish yourself as a financial advisor, it takes time to pass that baton on to someone else.

Succession planning should be a key component of any business practice. But why is succession planning so important in financial planning and what are the benefits of proactively planning your succession?

The Importance of Succession Planning

A successful succession begins with a strategic plan – a retirement plan of sorts that allows for a smooth transition of ownership. It’s not one of these quick business transactions that can come together in a day, week, or even month. Planning and carrying out succession successfully requires a significant investment. It’s a business transaction with your entire legacy on the line.

If you have not given much thought to the importance of succession planning, here are five reasons why taking a proactive approach to succession planning is a necessity.

#1 – Job Security

Succession planning is a form of job security. How so? When a client is shopping around for a financial advisor, they want to find a business that is stable and secure. They want to know that a business will be around for the long haul.

Wealth management is a long-term endeavor, and clients do not want to put their financial wellbeing in the hands of someone about to exit the game. When you take steps to plan for the future, you prove to your current clients and potential prospects that you do not intend to leave them high and dry when you retire. You show that your succession plan will carry them through without an interruption to their financial services.

#2 – Value

Succession planning increases the value of your business. Planning for the future not only attracts clients, it also makes your business more appealing to buyers, a successor, or even business partners. You make yourself more marketable as you show your commitment to continuity.

#3 – Communication

Succession planning shows your care about the well-being of your clients. Clients want to feel informed and they want to feel confident in your ability to provide continuous services, which is why your succession plan must include a clear communication strategy that keeps clients in the loop about upcoming changes.

Catching your clients off guard with unexpected news will undoubtedly hurt your business. Clients are sensitive to unexpected change. Plus, the unknown of a new situation can easily create undue panic and worry.

With a detailed communication plan, you can control the narrative surrounding your succession. You can reassure your clients that a change in ownership will not equate to a disruption in their services nor a drop in the quality of services. You owe it to your clients to smoothly transition that client relationship to the new successor.

#4 – Regulations

Succession planning helps you comply with the law. Working as a financial advisor comes with plenty of rules and regulations. It’s a career choice where you cannot forget to dot your I’s and cross your T’s, and succession planning requires that same attention to detail. When executed properly, meticulously, and lawfully, a succession plan helps you follow regulatory requirements. It serves as a guide to ensure you avoid legal trouble or compliance issues.

#5 – Time

Succession planning gives you the gift of time to create the right plan of action for your specific circumstances. A succession plan does not come together overnight. It is a multi-layered, multi-faceted business transaction. So when you plan your exit in advance, you have time to think about your decisions and contour the right path for you, reevaluating and adjusting as you plan. Not rushing or being forced into expedited decisions will give you the best chance at achieving an optimal outcome.

Start Your Succession Planning

While it might appear that succession planning is only meant for those nearing retirement, that couldn’t be further from the truth. Succession planning is for all financial advisors, the young and the old. Whether you are just starting your career or you have already dedicated decades of your career to the financial services sector, the better you prepare for your future the more you increase your success .

And if succession planning is not among your top priorities, make it a goal to start the process. You can even hire a financial planner coach or join a financial advisor coaching program to help you achieve this goal. You will not regret the choice to start your succession planning.



Succession Planning: Why Financial Advisors Need to Plan for the Future