The challenges advisors face in implementing succession plans often arise more from emotional hurdles than to questions of valuation and financing, speakers at a Napfa conference said Wednesday.
To begin with, advisors are overwhelmed with where to start, said Diane MacPhee, founder of DMAC Consulting, speaking Wednesday at the spring meeting of the National Association of Personal Financial Advisors (Napfa) in San Diego.
Advisors should begin the process by putting the outlines of a succession plan in writing. Once you have something down, “you’ll be compelled to action,” MacPhee said.
One trick is to write out your desired outcome. “Fast forward to the end of your career and then work your way backward,” she said.
Do a self-evaluation and figure out what you don’t want. Merging with another firm is painful for some people, or building up staff in the hopes that you can find a successor creates a load of management duties you may not want.
Be prepared for miscues. “Your first attempt may not work,” MacPhee said. “Allow enough time in the event you make the wrong hire, or clients aren’t responding” to the transition plan.
Finding the right merger partner, buyer or successor always comes down to finding the right cultural fit, so plan on spending time and effort in courtship.
“It’s like a client relationship--it’s about how you connect with a buyer or seller” of a practice, said Eric Leeper, of FP Transitions, another speaker at the session. “It’s not going to be a question of price” once the right fit is found.
The primary concern advisors have with a succession plan is making sure clients are taken care of. That’s rather important, Leeper told Napfa attendees, since you’re going see them around town after you’re retired.