How to Create a Financial Advisor Succession Plan

Succession Plan

If you’re a financial advisor running your own business, having a succession plan is crucial. A succession plan helps to ensure that your business can continue to run smoothly if you’re no longer able to work. 

This article will look at the necessary components of an effective financial advisor succession plan, and how you can go about creating one.


What is a Succession Plan?

First, let’s discuss in detail what a financial advisor succession plan is. A financial advisor succession plan is a document that outlines how your financial advisory business will be passed on to another financial advisor if you’re no longer able to work. This could be due to retirement, death, or disability.


Essential Components of a Succession Plan

So what should you incorporate into your financial advisor succession plan? Here are some key components:

  • List Of Clients: The financial advisor succession plan should include a current list of clients and contact information for each client. This will ensure that the successor financial advisor can provide continuity of service to your clients.
  • Pricing and Client Service Models: The financial advisor succession plan should also include information on your pricing and client service models. This will help the successor financial advisor to understand how you’ve been running your business and will allow them to continue providing services in the same way.
  • Identification of a Successor: To have a successful financial advisor succession plan, you need to first identify a successor. This person should be someone who shares your vision for the business and who has the necessary skills to take over. It’s important to have a detailed discussion with your potential successor about your expectations for the business and to ensure they’re on board with your plan. Even if you don’t have a specific person identified, you should at least have a list of potential candidates.
  • Specific Job Requirements: Once you’ve identified a successor, you need to outline the specific job requirements they’ll need to fulfill. This could include financial qualifications, industry certifications, and so on. It’s essential to be as specific as possible, so there’s no confusion about what’s expected of the successor financial advisor.
  • Plan for Skills Development: Even if the successor financial advisor has all the necessary skills and qualifications, they may still need some training to be fully prepared to take over your business. As such, you should include a plan for skills development in your financial advisor succession plan. This could involve financial education, mentorship, and so on.
  • Transparency: Your succession plan must be transparent with your clients and your successor financial advisor. Your clients need to know what to expect if you’re no longer able to work, and your successor financial advisor needs to be aware of what’s expected of them.
  • Methods to Measure Progress: To ensure the financial advisor succession plan is working as intended, you must have methods to measure progress. This could involve setting specific goals and tracking progress over time.
  • Flexibility for Changing Business Needs: Finally, it’s essential to have a financial advisor succession plan that is flexible enough to accommodate changing business needs. This could include changes in the financial markets, changes in client needs, and so on.


Tips for Developing a Financial Advisor Succession Plan

Now that we’ve covered the essential components of a financial advisor succession plan, let’s take a look at some tips for developing such a plan:

  • Start Early: It’s never too early to start thinking about financial advisor succession planning. The sooner you start, the better prepared you’ll be.
  • Keep it Simple: There’s no need to make your financial advisor succession plan overly complicated. Keep it straightforward so that it’s easy to understand and implement.
  • Be Realistic: When setting goals and expectations, be realistic. Don’t set unrealistic goals that will be difficult or impossible to achieve.
  • Get a Valuation:   One of the first steps in financial advisor succession planning is to get a business valuation. This will give you an idea of what your business is worth and help you set realistic goals.
  • Have a Backup Plan: It’s always a good idea to have a backup plan. This could involve having a second financial advisor who can take over if your successor cannot do so.
  • Allow for a Transition Period:  When implementing a financial advisor succession plan, allow for a transition period. This will give your successor time to acclimate to their new role and make any necessary adjustments.
  • Review Your Plan:  Finally, review your financial advisor succession plan regularly. This will help ensure that it’s still relevant and remains up-to-date.


Develop a Succession Plan

As you can see, a lot goes into financial advisor succession planning. However, if you take the time to develop a well-thought-out plan, it can be a valuable tool for ensuring the continued success of your financial advisor business.