Succession Planning for Financial Advisors [Tips + Process for Successful Succession]

written by FIG Marketing November 30, 2022

Updated September 22, 2023, at 1:23 PM

You’ve poured your entire life into your financial services business. Your business has thrived, pushed past hard times, and delivered exceptional client experiences.

All things do come to an end, though, and your involvement in your business is no different.

Succession planning for financial advisors is a key decision to consider and plan for to make sure the brand—and clients—you love still flourish after you leave.

Here are succession planning tips and a process to keep in mind for financial advisors.

Start Succession Planning With Goals in Mind

The first succession planning tip for financial advisors starts to clear retirement objectives. When you start your succession planning early, you have the comfort of thinking clearer and in a greater capacity.

It can be difficult to mentally set your business aside and envision your post-succession life, but it’s a critical component to getting a good jumpstart on your succession plan.

Here are some key questions financial advisors should ask to help lay the foundation for succession planning:

Is there a dollar figure you have in mind for the valuation of your firm?
Would you prefer an ongoing revenue stream or a lump sum payment?
Do you envision partnering with your successor to train and guide them, or do you prefer an outright sale?
Are their any heirs that may have an interest in your firm?
Do you wish to have a slow transition away from your business or an immediate exit?

Be Open to Various Succession Planning Options

There’s no one-size-fits-all succession plan. There are various structures and steps that are available to design the plan that’ll work best for you. You don’t have to feel boxed in by selecting an internal successor, nor do you have to feel the necessity to find an outside company to buy your business.

There are plenty of options—from growth modeling to finances to plan mapping—that may change or need adjustments along your succession journey. Don’t let yourself get tunnel vision and be open to new opportunities and plan modifications that may arise.

Keep Culture in Consideration

Culture and fit is a critical component in succession planning. We hear often “It just wasn’t the right fit,” but that’s the last thing you want to hear from internal talent or external players in your succession plan.

Whatever you choose as your succession plan design, it’s imperative that you always keep the right cultural fit in mind. It will be potentially the most critical factor in the business’s long-term success.

Internal or external partners should share your same values and philosophies. The right successor or successors should reflect your passion for the business and the company culture you’ve worked hard to instill in your team members.

If the cultural fit is right, it creates a post-execution synergy that’ll enable essential conversations and ensure the team and your clients are confident in the firm’s next phase.

Related: 8 Financial Advisor Business Growth Strategies

Work With Succession Planning Experts

Your drive for success and clear visions make you an exceptional financial advisor, but sometimes that can mean you may have biased opinions about your business.

By working with a succession planning expert, you can be sure that you get objective viewpoints to establish and achieve the goals necessary to succeed with your succession plan.

A professional succession planner can help you map out processes, maximize your firm’s value, implement plan logistics, and properly execute your succession plan.

12-Step Succession Planning Process

A detailed step-by-step succession plan can set the stage for a positive succession experience and allow you to look forward to what’s next.

These 12 steps from Next Continuity and Succession Planning have been proven to organize and execute a successful succession plan.

Continuity Basic: A basic plan, protocols, and implementation process is put in place if something were to happen, such as a long-term disability or untimely death.
Succession Discovery: Every advisor has a different succession plan in mind. It’s important to understand the current business to better adapt to future changes.
Business Consulting: Comprehensive and strategic business model evaluation will help increase firm development and valuation.
Succession Plan Mapping: A specific succession plan is created to help everyone achieve the final objective together. However, it’s important to stay one step ahead. Variations and additional steps should be added based on changing needs.
Back Office Logistics: Developing back-office methods for a merger or acquisition isn’t easy. Steps should be taken to find necessary alliances that can complete a succession plan.
Financing Structure: All funding options are discussed and any additional steps to attract or retain proper financing, along with continuous evaluation regarding special financing options.
Document Analysis, Coordination, & Review: Analyze and coordinate essential documentation elements of the succession planning process.
Strategic & Tactical Growth Modeling: Continue to grow your business and its valuation to help the company and its team members thrive after the plan is executed.
Culture Coordination: It’s important to address any concerns or disparities in different business cultures beforehand to ensure success of the new business model.
Ongoing Business & Succession Review: Regular communication, plan reviews, and accountability can help your journey and allow you to adjust to any changes.
Plan Execution & Transition: The plan is executed, and the firm-blending process begins for a well-executed transition and an enhanced succession experience.
Advisor Exit Implementation: Finally, it’s time to transition away from the business. It can be abrupt or methodical, depending on the desires of everyone involved.

Next Continuity and Succession Planning is a program that connects you with succession plan experts to utilize the proprietary Successful Succession 12-Step Process.

If you’re interested in executing a succession plan for your financial services business, download our free guide below to read more on Next’s 12-step process and to be on your way to a Successful Succession.

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For Financial Professional Use Only

The information within this article is for educational purposes only and does not constitute legal, tax or investment advice. Customers should consult their tax or legal professional regarding their own unique situation.