Successor or Sale? A Tough Choice

Successor or Sale? A Tough Choice

Advisors who are nearing retirement age face a tough choice: is it better to appoint a successor or sell the firm?

Views on which is the better decision tend to vary.

However, both decisions have merit. What really matters is how the decision is implemented. The most important aspect is ensuring continuity for your clients. It’s very important to communicate your plans well in advance of retirement. The worst thing that can happen is to not have a business continuation plan.

It’s important that your clients meet your successor well in advance. If you don’t have someone at the firm who can continue offering the level of service that your clients have come to expect, you need to go outside the firm to find a suitable client. It is your obligation to your clients.

If you don’t already have someone interested in buying the firm, you may face a longer transitional period as you search for a candidate. You’ll need to communicate this fact to your clients.

However, some advisors in the industry don’t see a sale as a form succession plan. It is rather perceived as the opportunity to find the highest bidder, and is often the choice of advisers who don’t have deep relationships with their clients. This decision is often perceived as being not about the client’s interests, but the adviser’s.

If you have a complete financial planning practice, your business model should include a succession plan. The senior adviser can gradually introduce the adviser who will take over, and ease the client into the new relationship. It is critical that the clients feel confident that they will be able to enjoy the same level of service.  If you have clients you have worked with for many years, and you know their children, their grandchildren, their life stories, creating an orderly transition is part of your responsibility to them.

For more information, please read:
A tough choice: Name a successor, or sell the firm? | Financial-Planning.com

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