“If we were to do nothing in a firm like mine, with 115 advisros, eventually we would have no firm,” he said. “Eventually everyone would retire or pass on, and if I have no receptacle to catch their clients I’d have a big issue.”
For many smaller advisors, transitioning out of the business means finding someone to acquire their practice. Yet smaller practices may have difficulty attracting the attention of serial acquirers often associated with private equity backers and very large transactions. With TAG 2.0, Trust Advisory Group joins a growing number of firms using succession planning as an engine for acquisitions.
For its program, Trust Advisory Group has created what it calls the “TAG TEAM” model for succession. The TAG TEAM creates an internal pipeline of junior advisors ready to step into the role of successor.
As part of the transition, Trust Advisory Group purchases the book of business from the established advisor and provides financing for the next-generation advisor’s transition into the business.
The company casts a wide net when looking for potential next-generation advisors.
McCance goes out of his way to hire young people, focusing on individuals between the ages of 25 and 35.
“Millennials are a great opportunity with their knowledge of technology and social media and lifestyles that are very different than our 60-year-old advisors,” he said. “I thought that if we were to create an environment where we took millennials and their knowledge and our old-school customer services and financial planning model, we would have a great advisor.”
Younger advisors are also better positioned to serve the $20 trillion to $30 trillion that will transition to millenials in the coming decades, said McCance.
Trust Advisory Group trains the junior advisors as associates. Training includes education on financial planning, marketing, selling techniques, client service, investing strategies, and product and regulatory compliance.
The training also prepares them for industry-specific exams required by regulators.