Succession Planning for Financial Advisors: Building an Enduring Business, + Website

Chapter 4 Creating Your Succession Team

The People Problem

So by now, at least figuratively speaking, you’ve set up the correct entity structure, and you have an organizational structure and a modern compensation system designed to support an enduring and transferable business. But you’re still the sole owner (or perhaps one of several owners without a clear plan). Having built the foundation for a successful succession plan, how do you convince the next generation to get on board (as business owners and investors in one, single business) your ship?

Let’s just ask it out loud: Will the next generation invest in what you’ve built? Does it make more sense for them to hang out their own shingle or to build on top of what you’ve spent the past 10, 20, or 30 years building and growing? These are good, tough questions; let’s make them harder, and more relevant: Why would a producer who makes $250,000 a year or more, who has no or minimal responsibilities for hiring, firing, signing leases, negotiating leasehold improvements, or worrying about payroll, want to become an investor, a minority owner in your business? Those are the issues that we’re going to focus on in this chapter.

So, what are the answers? Well, for starters, understand that you can offer a very unique investment opportunity, and you will need to learn to articulate it once your plans are complete. Think of it this way: How many investments can a younger advisor make that come with a mentor and a paycheck, and pay ...