LPL Advisors Focus On Succession Planning

By Mike Byrnes

The lack of succession planning among the financial industry's aging advisor population remains an issue, but LPL Financial advisors are showing interest in solving the problem.

Mimi Bock, executive vice president of business consulting at LPL Financial, and Brad Bueermann, a leading succession planning expert from FP Transitions, shared how the 2,600 advisors that attended this year's Focus12 conference in San Diego are starting to focus on succession planning.

Most advisors are starting to figure out that their business is the single most valuable asset they own, according to the speakers. FP Transitions has completed 3,400 valuations and they average $1.4 million.

Bueermann said advisors are doing a better job of growing their businesses, and part of that growth planning is having an exit plan.  "It is about asking, 'How do I build a better practice?'" he said.

Advisors used to focus on revenue growth of the book, he said. Now, as business owners, they are focusing on enterprise strength. This includes more than just looking at revenue, and focusing on things such as having the right employees, overall structure and cost configuration. 

'What happens after you leave?' is another question that Focus12 conference speakers asked the attendees to think about. 

Owners are taking a long-term approach, according to Bueermann. They are giving equity to junior partners so they can eventually take over the business. This allows for long-term cash flow and a better plan to take care of clients when there is an ownership transition. 

Having multiple silos under one roof is not the right approach. Instead, owners should create a structure where all employees are working together to service the clients, said Bueermann.

Advisors at the conference that shared their experiences said they saw a surge in their business after they put a plan in place for the junior advisors, the speakers said.  Bueermann said this is because the junior partners have taken on an ownership mentality.

Succession planning sessions used to just be attended by older advisors, but now next-generation owners are taking up a third of the seats, he said. "They were asking, 'How do we get this started at our firm?'" Bueermann said.

FP Transistions stressed that firms add to their value if they view themselves as a business, not just a collections of clients. 

Brock said the conference's sessions on succession planning were standing room only. LPL has picked up on a trend in which many advisors are trying to create a legacy, she said.

"While many have business continuity agreements, a large number of advisors don't have a comprehensive succession plan in place yet," she said. "Our advisors are clamoring for information about how to build enterprise value and then, when ready, realize that value."

Want to learn more about Focus12? Read Mike Byrnes' other article called LPL Advisors Get Advice On Social Media.