Getting everyone’s input on how to make succession work is key, and for an advice company it is all the more critical.
If the future generation of advisers are enthusiastic about the succession plan, this is the first step to success – it is that generation of advisers who have to make it work.
And for the earlier generation of advisers, a strategy that allows them to achieve their personal ambitions, financially and otherwise, combined with roles, albeit part-time, that allow them to maintain client relationships can be a successful one.
FTA: What are the most common issues to look out for when forming a succession plan?
PM: There are many issues that come up in formulating a succession plan, but like in any family business, the question of ownership versus stewardship is a big issue.
And as this relates to the succession plan, how the retiring generation will be compensated for what they built is always an issue if this is not clearly provided for.
There are benefits of an approach that keeps the founders fully involved, albeit on a very part-time basis and in new roles, and where the focus is on ensuring that there is real continuity in client relationships.
It is not only the expectations of the founders that need to be managed; the younger generation of advisers also needs to be clear on the plan and of their roles.
FTA: What is a good strategy to overcome these issues?
PM: Alignment of vision in relation to the succession plan is key. Having the mechanisms for succession be part of the strategy and strength of the advice business is a great way to approach things.
FTA: Is it a good idea to build a business around your family?
PM: Families are not always easy, but family businesses, including in the advice area, have much to offer.
It can be a good idea, but only if there is a fit with what the relevant family members are interested in achieving.
FTA: How do advisers protect their business's profitability when passing it on?
PM: There are many ways of achieving a cost-effective handover of the business while protecting profitability.
The most important component will be an alignment of interests, if all stakeholders have an interest in things working out well, the chances of things working out well are greatly improved.
carmen.reichman@ft.com
