Roadmap to Successful Succession Planning for Financial Advisors

By Emily Martin

I have had the good fortune to partner with many financial advisors in my 18 years in the business.  In my earliest days in the field, a more senior representative mentored me.  I was her assistant, and I learned from her example. Business succession planning with a financial advisor is similar to this mentoring relationship.  While it fulfills a critical portion of the long-term business strategy, it also provides unique learning and growth by the sharing of expertise of the advisors.

Succession planning is integral in any financial advisor’s business to ensure continuity for your clients and protect your business from any unplanned events. We advise our clients to plan for the future, and succession planning is us taking our own medicine.

I’ve experienced succession planning with a few different partners and am excited to share my experiences to help others (on both ends of the relationship) have a successful strategy — ensuring positive results for the financial advisors as well as the clients.

Taking it Slow to Create a Succession Plan that Works for You

I met Hank in 2004, and we dipped our toes into the business succession waters.  He had gone through many succession partners before me, so I was cautious with making any quick changes to our relationship or his business. I suggested we get to know each other’s styles over a few months and see if we were compatible.  I had more investment experience than Hank, and he was an insurance guru who had taught many Life Underwriter Training Council Fellow (LUTCF) classes over the years.  We worked well together and cemented the succession with help from our broker-dealer home office. It consisted of continuous introductions to his clients and my running the meetings while Hank became a hands-off observer.

Standardized Succession Drives Business Advantage

In 2016, my fellow Interactive Financial Advisor colleague, Rex, reached out to me as a partner for his business succession planning.

Because we’re both are currently affiliated with Interactive Financial Advisors (IFA), the process has been incredibly smooth.  IFA’s process is standardized and accounts for the key needs in a succession planning process: compensation and knowledge transfer.

The transition compensation talk was much easier and clearer because IFA allows the active advisor and retiree to split fees equally.

IFA also has a superb client relationship management system that is cloud-based. Rex is much more hands-on than Hank, so easy access to information to listen and learn is critical. With the flip of a figurative switch, I can access client history and investments summaries.  There is also the capability to upload non-IFA statements and summaries to the cloud based imaging database.  The days of going back to the office to grab a file are going to be a relic of the past.

Remember It’s a Big Change for Your Clients, Too

I have met with so many lovely clients during my partners’ succession planning over the last 13 years. While each client experience is unique, I’ve found they generally fall into 3 general buckets:

  1. Tired of Change: Clients who were not interested in another transition, and they took their assets elsewhere. This is to be expected.
  2. Low-Touch: Clients who are more hands-off with the transition process but will still call when they have a need (rollover 401(k) or a family member has left them an inheritance, etc.).
  3. All-In Partners: Clients who loved working with Hank or Rex and appreciated the thoughtful and organized transition process to ensure their long-term success.

You cannot win over everyone at once, but it is important do your best to reach out regularly. Change is a process that requires regular cadence, rhythm and appreciation for everyone’s unique experience.

Top Tips for Successful Transition

I’ve experienced a few business successions now, and my advice to advisors who are looking for a successful transition are as follows:

  • Find a partner who has a similar planning philosophy
  • Be open and honest about the expectations that you have in servicing the succession clients
  • Be a good listener and be sensitive to the strengths and weaknesses of your partner
  • Go with your gut, if the fit does not seem right, it probably is not
  • Embrace technology to streamline and standardize the process
  • Remember your client is going through a big change, too, and keep their success as your “true north” if things get tough

I wish you all the good luck that I have had in finding prime partners and creating successful business succession plans that drive value for the financial advisors as well as the clients.

Advisor Fast Facts

Who: Emily Martin

Firm: Brooklight Place Sec. Inc

Joined Interactive Financial Advisors: 2016

Location: Bloomington, IL

Favorite Advisor Memory:  I often help clients through the worse times in their lives: death, divorce, and job loss.  I derive great satisfaction from making these difficult times a little easier by giving advice and tackling the financial tasks that often overwhelm my clients.

Advice for Prospective or New Advisors: I find my work challenging and fulfilling.  On the not-fun/challenging days, I do my best to focus on the positive and make a plan to get through the rough patches.

Learn More about Emily:  I have a liberal arts education with a major in mathematics from Grinnell College.  I became a Registered Representative in 1999.  My business ranges from investments to personal insurance.  In 2004, I moved back to the Midwest when my husband joined an ophthalmology practice in Bloomington, IL.  We have three children and I enjoy volunteering and group fitness.