Jay Marsden, 50, an elder law attorney in Holliston, Mass., who also runs Solares Hill Advisors, a full-service wealth management firm, is not only planning his own post-retirement succession but also looking to help other advisors sell their firms when they retire. Three years ago, he created a succession plan for both his legal practice and his financial advisory firm, but he’s also looking to take in other FAs. He plans on working “at least another 20 years or more.”

To that effect, he bought a small office building on a main road in town “to make ourselves more visible with the idea of having a place for people who are looking to sell their practice and move on. If we want to be able to seriously approach people so that they feel that we are a serious practice that they would want to leave their practice to, we needed to have a real physical presence. They can transition into our system, then slowly walk away from their practice.”

Advisors must not only prepare sooner rather than later, but think about several other things if they hope to maximize their post-retirement lives, for themselves, their families and their clients. “As a sole advisor business, I think it’s critically important to have a valuation done on your practice annually,” says Watters. “If you have a heart attack and die, the first thing a consultant is going to want is to see the numbers. And who has the numbers? The guy who just died. That’s a big problem. If you have a yearly valuation done, you have the numbers available in order to launch the sale.”

“If you don’t have a buyer for your business and you die, your family will be really lucky if they get half of the value of your business,” he adds. “When there’s a buy-sell agreement in place, everything is smooth. It’s also better for the client. They can stay with the firm unless they don’t want to. At least there’s a choice. The other way, there is no choice—the doors are closing.”

Karner notes that transitioning clients to a new firm requires their consent, so a well-drafted client engagement letter anticipating a succession planning change will make the transition go smoother, especially if a large number of clients are involved.

She also recommends documenting and organizing all of your business processes, including systems and contracts. “In a succession plan, whether it’s an internal transition or a third-party sale, those things really count and can impact the value of your business.”

From the client’s perspective, one of the most important considerations, but one also often overlooked, is the simple word, “fit.”

“The most discomfort I’ve seen post-transaction is because there was inadequate attention paid to whether the fit between the old firm and the new firm was right,” says Karner. “You want the client to feel that their money is still being managed by the right people.”

That means examining the new firm’s investment philosophy as well as its fee structure, says Marsden. “It shouldn’t be just a grab for assets,” he says. “If you try to assimilate a bunch of disparate things, it might not work out as well as you might think. Your clients will not be happy moving from one extreme to the other. That’s the biggest challenge.”

“You want to make sure there is continuity for your clients,” Watters says.