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Succession Planning for Financial Advisors: Building an Enduring Business, + Website by David Grau Sr.

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Chapter 5 The First Step—A Continuity Plan

A Dress Rehearsal for Succession Planning

The single biggest threat to an independent practice with one owner or one primary advisor is not the lack of a succession plan; it is the lack of a plan to protect the clients and the owner’s cash flow and value in the event of his or her sudden death or disability (temporary or permanent). In the smaller and more common one-owner, one-generational practice models, a continuity plan must often look outward for its protection and support and to realize its value, usually from a replacement owner. A properly constructed business continuity plan provides for uninterrupted client service and the protection of business value by helping to ensure that the remaining owner(s) has/have the necessary talent, numbers, and funding to continue to run and grow the business while buying out a former owner. In the context of a continuity plan, practices and businesses face very different challenges.

If you’ve built a multigenerational business or are well on the road to doing so, your continuity plan will derive from your succession plan. An internal ownership track, once implemented and in place, is the best continuity plan available, as clients’ needs are addressed by other principals who are invested in the same business; at least in theory, they cannot individually do well unless the business as a whole does well. But that process takes time to design and implement, and, currently, our estimates are that ...

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