Four ways succession planning is about more than your retirement

Succession planning isn’t just retirement planning.

It’s growth planning, continuity planning, risk planning – all of the strategic preparation that plays a role in the value of your business.

No matter where you are in your career, it’s important to have a succession plan in place – not just for your retirement, but for the present and future of your business.

Succession planning is growth planning

In a growing practice, advisors are often constrained by the number of hours in a day. This limitation, however, can be mitigated by recruiting another advisor or combining forces with another established practice. And the decision to grow your practice or be part of the growth of another is often determined by where retirement lies on your horizon.

Ten to five years out from retirement? You’re in a good position to develop a long-term succession plan.

Five to three years from retirement? A merger becomes a better strategic option.

Less than three years from retirement? It’s likely time to consider an outright sale.

If it suits your timeline, long-term succession can benefit your clients as well as your practice, by enabling continued growth and increasing the value of your book of business. And should you choose a more junior advisor as your successor, you can also provide support and guidance as they grow into their role and develop their own book.

A less-experienced partner can help you continue to build your client base, keeping your less-intensive client relationships in-house while giving you time to personally serve your more demanding clients’ needs. This helps you to stay growth-focused at a career stage when many established advisors are less interested in pursuing new business.

Succession planning is continuity planning

Your clients are going to ask. In conversations about lifelong financial planning, it makes sense your clients will ask about the future of their lifelong financial planner. Having a succession plan in place ensures you can speak on the topic with confidence.

A solid continuity plan helps keep your book intact when you decide to sell – meaning it will have more value. And clients may be more likely to stick with your successor if they’ve already gotten comfortable with their counsel, which can impact your post-succession earnings.

Succession planning is risk planning

You may be years away from retirement, but we don’t always get to choose when we leave. We encourage every advisor to have a catastrophic plan in place to protect the interests of their clients and their loved ones.

Because of rigid regulatory limitations on beneficiary payments derived from a book of business without a prior agreement in place, it’s critical you have a catastrophic plan ready. This will give you peace of mind, and you can always change your plans as your practice matures.

Succession planning is business planning

Don’t let the perfect plan of tomorrow get in the way of a good plan today – it’s as true for your financial well-being as it is for your clients’. And like your clients, each stage of your career has different opportunities and challenges that can benefit from succession planning.