Succession Planning & Continuity Planning

Diane MacPhee |

Whether you are a solo practitioner or an ensemble; the future is staring you in the face. We do not know what is in store for any of us, thus we contend with the element of uncertainty ideally with a planner's approach. Hmmm... are you applying a planner's approach to this challenge? Translation: Have you done any planning for the contingency of a disaster? Have you created a long term succession plan? 

Many advisors are overwhelmed, mildly cranky and not motivated to think about one more thing they need to do. Yet, this is really not one more thing you need to do. This is something you must do. Your firm deserves to have a clear continuity and succession plan in place. This advice has been put forth repeatedly and still not much traction has been accomplished. Of course my curiosity as a consultant begs the question - What is going on out there? Why are there so few completed continuity plans and/or succession plans? 

Here is what I see and hear from advisors: 

1. I do not have clear guidance from the regulatory agencies. Much of what is purported as helpful direction is very general in practical terms. 

2. Isn't there a template out there I could just buy?

3. I honestly do not know where to begin.

On these top three points, I could not agree more with the first one. There has been a mildly helpful Model Rule as a start. Yet, in my conversations with regulators more questions arose surrounding what the rule requires of advisors. The regulators readily admitted that I raised some questions they have not even thought of...never mind creating regulations for these same conditions.

Let's tackle number two - yes and no. YES, I can create a template and sell it to all of you, but is that the right way to approach this in terms of doing the right thing? Here comes my NO... I want every firm to examine a robust checklist of their operations, professional relationships, staff and client segmentation. Once you have completed a proper dossier on your business - we move on to who is best suited to step in and serve if something were to happen to you. This is NOT Succession - this is Continuity. Ideally, one dovetails nicely into the other but many times that may not be the case. The commitment to do this correctly requires careful thought, substantive conversation and ultimately writing the plan that is tailored to you and your firm - not a template.

Moving on to our third and final point: Where do I begin? Pen to paper. Start by preparing a very detailed summary of your firm as if you were preparing it for sale. This summary must include the history of your firm, a profile of your staff, your client segmentation, your revenue and profit history, your service model, your fee schedule, your investment philosophy, your technology platform, your custodial relationship, and any related professional relationships. Finally, describe your hopes and desires for the future of your business. Now with this impressive document in hand (yet not shared with just anyone) you are ready to keep your eyes and ears open at all times to search and find a suitable solution.  By suitable solution I mean what type of person makes the most sense to step in at a time of crisis to help your clients and staff?

The solution for disaster planning (continuity) may or may not be the same solution for the future (succession) of the firm. When you have identified a few possibilities, the dance begins. Ultimately an informal charter agreement among all parties is written up in addition to the legal contracts. This agreement I speak of is one I find very essential. Such a robust topic is for yet another day.

Suffice to say - beginning to get this ball rolling is one of the most important and respectful actions you can take when you consider those you love; your family, your clients and your staff. (OK maybe not all of your clients...HaHa)

In the spirit of Valentine's day and loving yourself first - go out on the calendar and schedule those first open blocks of time available and put that pen to paper. Be on the lookout for relationships that may be just what you and your firm needs.

Take a deep breath and know this is the beginning. It is not a sprint. It is a marathon. Doesn't your firm and your clients deserve the very best from you?

Who knows? Perhaps chocolate can be part of the plan.

Happy Valentine's Day.


Always about inspiring,