Updated on February 12, 2020 at 9:45 AM
It’s common verbiage amongst us, and it’s especially prevalent with financial services professionals. Whether you’re a sole practitioner, or lead a team of multiple planners, time spent on the business often escapes even the finest time managers.
From reviewing markets and product options to daily client management and planning needs, time escapes the best of us. It’s as simple as that.
How to Plan for Retirement
What’s your number?
When asked when you plan to exit your business, what would your immediate response be? The top three financial professional answers I hear often are:
- “I haven’t thought about it.”
- “At least 10 years out.”
Each of these answers delays the necessity to discuss and plan through what’s needed in a successful succession plan. A delayed approach to planning for business succession can have multiple impacts that’ll mostly impair the future value and structure of the business.
Financial professionals that have taken the proactive approach to planning for the eventual transfer of their business assets are already seeing the return on their investment. Here are five things established financial professionals are doing now to secure the future of their business.
1. Creating and Implementing Strategic Growth Plans
The key takeaway is implementation. Many advisors work diligently to create strategic initiatives for their businesses, but all too often fail to execute them. Alone or with your key team members, diligently create the growth plans for the next one, three, and five years.
When complete, decide who will be accountable to each specific item. Be sure to review your initiatives regularly to quantify progress.
2. Systematize Everything
Understand there’s tremendous value in having sound internal processes. All internal workflows should be systematized to ensure ease in transition to future team members and your firm’s successor. Begin with macro processes and go micro; all the way to how your clients expect the phones to be answered. Map all these processes using your favorite technology for future review, alteration, training, and transfer.
3. Implement Continuity or Shareholder Planning Internally
Your future successor will likely come from within. Should a triggering event such as death or severe disability occur, a proper plan will allow the business to continue, and key employees will be rewarded appropriately.
That’s why we built our Next Continuity & Succession Planning program with businesses like yours in mind. Next is a proprietary continuity and succession planning module created exclusively for our financial professionals, delivering a complete succession plan called “Successful Succession.” It includes a coaching process, all the materials you’ll need, and side-by-side guidance to accompany you on your journey.
4. Mentoring Next Generation
Financial professionals are locked down each day with tactical needs, mostly client procurement and retention. Mentoring the next generation of financial professionals to create your future succession resource is vital. Spend the time to create and time-manage an effective mentoring model.
5. Alternative Revenue Models
Financial professionals face new scrutiny and opportunity with the ever-changing financial services landscape. Successful advisors look to new revenue opportunities such as adding a new line of business or charging monthly retainer fees to clients who do not have the assets yet to invest. Today there are multiple opportunities to increase earnings before interest, taxes, depreciation, and amortization (EBITDA) without substantially altering your business model.
Importance of Succession Planning
At the end of the day, maintaining a steady income and a stable balance sheet can consume almost all of your time. Even if you’re close to retirement, it can seem like a distant star far off in the galaxy.
However, making sure your business has an effective succession plan in place is absolutely beneficial—and perhaps absolutely necessary—for your business to survive.