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Written by: Jeff Bruhm | Axtella
Every advisor needs a succession plan, but few start early enough to build a good one. They often put it off until their practice has lost value. It’s easy to get caught up in day-to-day work, and succession planning can be emotionally difficult. By reframing the process as a worthwhile project to ensure their legacy rather than signal the end of their work life, advisors can get more comfortable taking the next step.
The psychological barriers to succession planning
Most advisors know that they need a succession plan. They’ve seen all the statistics about the great wealth transfer and the aging advisor demographic. They’ve heard horror stories about financial practices losing market value. They understand that business succession requires long-term planning. Advisors don’t fail to plan due to a lack of information. Rather, many procrastinate on the important succession planning decisions due to uncertainty and fear.
This reaction is understandable. When an advisor builds a practice over many decades, they pour their blood, sweat, and tears into the business. They skip family events to show up for clients in crisis. They spend years building relationships, recruiting talent, and working to grow their practice. Entrepreneurial people understand that every hard-won victory comes from strategy, effort, failure, and adjustment. By the time an advisor reaches retirement age, they have invested significant time, money, and emotional energy into their business. It can be difficult to think about letting go.
Advisors might also feel unprepared to facilitate succession. If they’ve never sold a business before, they have no domain expertise. Successful entrepreneurs are accustomed to doing many things by themselves, so it can feel difficult to seek help with the succession planning process.
In my experience, the barrier to succession planning is more psychological than logistical. Successful business owners are competent, enterprising, and adaptable; they need to recognize when their emotions are standing in the way.
The best time is now
Advisors often ask me when they should start planning. My answer is always the same: right now. When they start as early as possible, advisors ensure that they can build an intentional legacy. They have time to train successors, talk to potential acquirers, and draw a clear map of where they want their business to go. A long, thoughtful process is always less stressful and more effective than a short, frenetic one. It also makes the work less overwhelming.
Advisors care deeply about their practices and their clients. They should envision succession planning as an extension of that care. Planning ahead helps them protect what they have built.
When I speak with advisors, I can clearly see how much they value their clients and their work. Their greatest thrills don’t come from beating the market or securing new assets. Instead, their excitement comes from victorious human moments when they help their clients achieve their dreams. Advisors understand that their work impacts people and families, and they build unique relationships with each client. This is their greatest motivator and greatest asset.
By starting succession planning early, advisors safeguard those relationships and preserve the long-term value of their firms. Each advisor has a “secret sauce” that makes them click with clients. Their unique combination of professional approach, individual personality, and method of interacting is what truly sets them apart. It’s also the most elusive part of any practice. It takes extensive forethought to preserve these qualities when an advisor retires.
Moving forward without fear
For advisors wondering how to get started, I recommend assessing their business. They should look at the fundamentals, like operations, services, revenue, and assets under management, but also the intangibles, like culture and relationships. They should ask themselves, and their clients, what makes them unique. They can prepare by holding preliminary conversations with colleagues about the future direction of their business and documenting their greatest successes. Even if succession is far on the horizon, it’s relevant to understand the value of their business.
Retiring for a business owner can take different forms. It could mean stepping back from their company completely or shifting into a consulting role. Succession planning doesn’t need to be a clean break. In fact, I have seen great outcomes when an advisor continues to share insight and answer questions after the ownership transition has occurred.
Remember, relationships are an advisor’s greatest asset. That includes relationships with clients as well as with colleagues and industry peers. Mindfulness and positive reframing can prepare advisors for an effective, intentional succession planning process. Everyone should get started on that, every day.
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