Advisors and Succession: Where’s the Plan?

Many advisors have spent a good part of their lives building their business and have the bulk of their personal net worth tied up in it, making their practice their most valuable investment asset — the one they are counting on to help fund their lifestyle in retirement.

Yet, research shows that only about 10% of advisors actually have a written succession plan, says George Hartman, a distinguished speaker at this year’s Distinguished Advisor Conference, being held November 9 – 12 in the Texas Hills, near Austin. Another 40% or so have given it some thought, but haven’t committed anything to writing — which leaves half of advisors with no plan at all.

Compounding the problem is the fact that many advisors have built “lifestyle practices” where they have consumed all the available revenue from their business to support their day-to-day living expenses. In many cases, that revenue flow has enabled an enviable lifestyle — one that will be at risk if the advisor slows down or leaves the business.

As a consequence, a number of myths have emerged that tend to encourage advisors to postpone their own retirement planning. They include common notions like: “It’s a seller’s market – I’ll have no problem transitioning my book” or  “My practice will always be worth ‘X times 12 month’s revenue”. “This type of thinking tends to ignore such key questions as ‘To whom would I want to sell; at what price; and under what terms and conditions?’ ”  says George, who is Co-Founder and Managing Partner of Elite Advisors Canada Inc., an independent enterprise dedicated to helping financial advisors capitalize on the true potential of their business through skillful practice management strategies and tactics. He is also Founder & CEO of Market Logics Inc., a firm that provides intelligence-based solutions to organizations and individuals looking to take their business to new levels.

George will discuss several other important issues around advisor succession planning. “Of course, there should be more to your succession plan than the financial aspects. You also want to make sure that your clients, who trusted you with their financial affairs, are well-looked after. Finally, remember that your succession plan is really about your personal legacy – how you will be remembered for what you did in your professional life.”  

This session at DAC, which will be attended by close to 200 tax and wealth advisors from across Canada, will provide tips for advancing thoughtful succession planning  in order to:

• Reduce the risks to both your business and your family because key decisions will have been made strategically, rather than under the duress of an unanticipated event
• Provide you with time to assign priorities to what you want to happen – striking the best balance between what you want personally and what is required for your business
• Allow you to focus on managing the business until retirement, knowing your plan is in place, thereby reducing the stress of last-minute decision-making
• Enable you to control the timing of your departure to take advantage of conditions that typically yield higher valuations
• Provide assurance to clients and staff, reducing the risk of defection and increasing value
• Give adequate time to the emotional aspects of giving up your life’s work.

Delegates to DAC will learn myths about business succession planning – some facts and fiction – including:

1. Realistic practice valuation – what determines value and how to maximize it
2. Acknowledging your readiness – financially and emotionally
3. Setting your target date
4. Strategic options for exit
5. Choosing the right successor

Final registrations for DAC end September 30. To register call Knowledge Bureau at 1-866-953-4769 or visit www.knowledgebureau.com/DAC.