As a result of this experience, Connealy updated his own plan. "Producing branch managers have their own issues to deal with in succession planning," Connealy says. He has chosen different people to succeed him for his advisory work and his branch manager job, he says, because a single successor might not have both skill sets.
According to Connealy, there are additional benefits of succession planning besides the advisors and their families' well-being. "As an employer, it is equally important to me that the business continues on without interruption and my employees retain their jobs if I should die prematurely," he says, adding that many businesses die with the owner or partner. "So succession planning has much to do with acting responsibly for the benefit of those who have assisted in building your business."
Roger Verboon, a senior practice management consultant at Securities America and is involved in its coaching program, works with advisors to set up succession plans. "It is inevitable that someone will have to take over a firm eventually, but many of these firm owners started as small shops and they have not really thought about it.
Sometimes it takes a lot of hand-holding and coaching. You do not need an enormous plan in place, but it is something you have to think about as a firm owner."
For some advisors, like David Peterson, the former managing director of Peak Capital in Denver, preparing for the future can mean joining a larger group but remaining independent. Peterson's firm became a division of United Capital, which has $16 billion in assets under advisement.
"The reasoning was that being part of a large firm like United Capital offers us, our team and the clients peace of mind that business will keep running smoothly should the unexpected happen," he says. "Or when I retire, I can gradually phase out and have others step in without a significant change for the clients."
United Capital is made up of 36 firms like Peterson's and offers back-office support and services. Peterson says he was nervous at first about losing control, but in the end it has not been an issue for him or his three partners.
Joe Heider, the owner of Dawson Wealth Management in Cleveland, for similar reasons decided to join Rehmann Financial. Dawson handled 600 retirement plans and Heider had 30 employees, but he had no succession plan. So he joined Rehmann, along with three other firms, as part of its expansion into Ohio.
"Why not go it alone? Because it did not provide a good succession plan for our clients or our associates," says Heider. "I had no plans to retire, but when I was about 54 [three years ago] I started thinking about what happens 10 years from then. Becoming part of Rehmann expands our capabilities and provides a true succession plan."
He is now the managing regional partner for Ohio and Indiana, and is seeking out other advisory practices and CPA firms to become part of Rehmann. "This also allows me to specialize in what I really enjoy most, which is wealth management services to high-net-worth business owners and doctors," he says.
"My clients know there is a deep bench that comes with a firm of 750 associates across retirement, tax, consulting, corporate investigative and wealth management services. The ability to collaborate with in-house expertise that comes with a firm consulting to more than $3.5 billion in assets is a bonus for my clients and myself."