Stuck at the starting line of finding a successor? Take these first steps
Vice President of Succession & Acquisition Consulting at Raymond James Rob Goff outlines how to begin identifying a successor.
“What does your ideal future look like?” It’s something you, as a financial advisor, ask your clients every day. But when was the last time you turned that question on yourself? If the answer is that you’d like to retire one day knowing that your clients and hard-built practice will be in good hands, it might be time to start identifying a successor.
The sale of your practice and your retirement may feel like a faraway decision, but the sooner you identify a successor the longer you’ll have to integrate them into the practice and communicate the change to clients. This will help the transition feel more like a glide path than a leap of faith for all parties involved.
A marathon starts with a single step. Once you’re ready to source your successor, the first step is taking stock of your goals. These should focus on what you hope to gain when you sell your practice such as maximizing wealth and/or expanding the services available to your clients – and will help identify exactly the type of advisor you are looking to align with.
Important questions to ask yourself in this step include: When do I want to sell and retire? Do I have time to train a junior partner? How involved do I want to be in the transition? What type of person will serve my clients best? What does their business model look like? What personality traits and industry experience do they possess? Who will my team work best with? What do they offer beyond what I have today?
The next step involves putting yourself in your potential successor’s position to figure out why they should be excited to succeed you. To home in on your value proposition, you might consider your team’s expertise and experience, diversity of staff and clients, turnkey operations, or ability to help an advisor expand their offerings.
Once you have this balance sheet in mind, you’ll have clear expectations and talking points when moving on to the next step – tapping into your network and resources to identify potential candidates. For advisors 10 years or more away from retirement, it could be an opportunity to take on a junior partner to help them learn your business and build relationships with your clients over time. With less time, you may need to find a more experienced advisor who is looking to fast-track their growth.
Start with your immediate network and expand the search outwards. Many advisors find their successor through a family friend, a colleague, one of their own family members or in other unexpected connections. By putting the word out with specific intentions, you might draw in the right person from a far-reaching corner of your network.
Exploring all of the tools at your disposal can help this process along, including using technology. At Raymond James, we offer Practice Exchange to all advisors, which is a one-stop platform with merger and acquisition tools, prospective buyer/seller matching and succession planning education. In any case, consulting a third party, whether that’s local management or a consultant, can help ensure you’re making the right decision and take some of the natural bias out of the process.
You’ll know you’ve found the right successor when you can imagine your clients will be better off a year, two years or 10 years after the transition. Once you have identified that person, you can start having meaningful conversations about the future and planning your exit strategy. Taking these steps now will pay off in the peace of mind that you’ll be able to achieve an ideal future for yourself and your practice by identifying a potential successor early in the process.