Over time, Cassaday and Co. has enacted measures and alterations to support its formal plan, Felix mentioned. At some point the firm increased Cassaday’s life insurance to account for the firm’s increasing value. “Rather than drastic changes, it’s about a continual evaluation of what makes sense for the next year or more, and course correcting along the way,” she said.
Responsibilities for the firm’s operations have gradually been shifted off of Cassaday and onto Felix. Other advisors have spoken or presented at company seminars, which Cassaday was once the sole presenter and speaker for, according to Michelle Tigani, the firm’s communications manager.
Following Cassaday’s lead, Felix, Krell, Young and Harris are in the process of creating their own formal succession plans. If anything were to happen to one of the principals after Cassaday is gone, Felix said the remaining principals would “continue on and account for the reassigned management of the passing principal’s client relationships,” and that they have installed a leadership team “to help facilitate decision making at the firm.” As for Felix, she is creating her own support team that she hopes will help her identify her successor.
Jeff Nash, the CEO and founder of the consulting firm Bridgemark Strategies, told Financial Advisor that the reasons advisors may prefer to sell to juniors is to keep the business within the firm. “It assures them continuity of service and frequently allows them to get a higher multiple in aggregate,” he said.
There are three ways advisors can sell their business, said Nash. They can sell to a peer, a partner-type scenario; they can sell to an institutional buyer with a pro of engaging a “sophisticated buyer” and a con of having to “do things [the buyer’s] way,” or they can sell their company to a junior advisor who can be trained to “maintain the culture” they’ve already created.