Transition scenario

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Mar 24, 2008 7:57 am

I am exploring a business relationship in working with my dad. He will be retiring in 5-6 years and he has been in the business for 41 years. Old school stock/bond guy. I am also in the industry. I have been in production, but am not at the moment. Currently, more in a supervisory/ ops role on an institutional platform. Other info: book is currently at major wire house, 80AUM.


Both of us would like this to work together and are looking into strategies/options. Any suggestions with this scenario? Are there any b/d's that really offer support in these scenarios, especially for the one retiring in 5-6 years? Would it simply be best to be in a supportive role for a couple of years while getting to know his clients? How do firms/ branch managers generally view this scenario?

Mar 24, 2008 9:13 am

Is there any way you could work for the wire? I ask because moving it, especially to facilitate dad's retirement, could prove costly. Client's are jittery enough in a move. Dad's retirement adds another layer of uncertainty. Asking client to move to another firm may be too much. 


That said, the independent route is absolutely the best platform for family practice transition. Moving now would cost clients that you and your father would have to replace. Still, come transition time there will be no problems.
 
Father son/daughter teams are common in the biz. Dad should bring you in, under his protective wing of production. Over the next few years he should have you work more and more closely with clients.
 
Lastly, he should bring you in as an equal, a partner,  not an underling. It's important that clients view you as an important addition to the practice, not as your dad's kid needing a job. Perception is reality. And yes, I understand you don't need a job. But will dad's clients perceive you that way?
Mar 24, 2008 9:36 am

BondGuy, not sure if this is what you are saying, but it seems that anyone you lose in a transition to indy now, would likely have left when his dad did anyway.  I would rather move indy now while dad is around than wait.  Once dad retires, the 1-2 punch of losing your long-time broker and now the kid moving firms might be too much for clients.  That way, the transition of dad leaving is not that big a deal.  Then it gives him another few years to build up his own book.  $80mm AUM - after 40 years, his client base is probably pretty stagnant.

 
Once you make the move, then slowly start introducing and transitioning clients.  Do the easy ones first, then slowly migrate the tougher ones, so that by retirement, you are completely in the drivers seat.
Mar 24, 2008 12:59 pm

Bond Guy/ Broker24, I had a feeling it would be the both of you giving some input here. Thank you! Yes, we are looking into working with the current wire. Just waiting to see if management remains there during the conversion (I am sure you can guess what regional he is at, at this point). Broker24, yes, it is a stagnant book. Dad knows I could add some life into those clients he rarely speaks with and with the larger folks down the road. I know we would both learn quite a bit from each other. Thank you!

Mar 24, 2008 3:54 pm

I'd love for you to come back periodically and update us. 

 


Good luck.
Mar 24, 2008 4:28 pm
Mar 25, 2008 6:24 am

Broker24,

 
If the deal gets done, I will most certainly keep you posted.  I am hoping we can work something out with existing wire.  It would be the simplest for clients and dad (change is tough for the ole man) to get a deal done at the wire.  We are hoping the current manager will remain through the conversion.
Mar 25, 2008 5:24 pm
chiefcornerfan:

Broker24,

 
If the deal gets done, I will most certainly keep you posted.  I am hoping we can work something out with existing wire.  It would be the simplest for clients and dad (change is tough for the ole man) to get a deal done at the wire.  We are hoping the current manager will remain through the conversion.


Doesn't it strike you as the least bit ironic to build your future plan primarily on hope and what is simplest while encouraging clients to plan using other criteria?

Mar 25, 2008 6:24 pm

No reason for Da Chief to jump all over the place on this. It seems to me that the most important thing to do is make the clients his so that there's no doubt about a move when and if the time comes. While I too hate to rely on hope or try, I think that first steps come first.



Nepotism is a wonderful thing. If people respect your dad, they'll have a natural affinity to you until you prove that you're not up to the task. If you bring other competencies to the table that dad not have it'll strengthen the relationship.



I imagine the majority of the clients came up with dad. I wonder if this makes for an older clientele?



Stuff that might be worth covering beyond 'returns':



Change is bad, safety is good. Taxes are bad, transferring wealth is good(for you and the clients). Sometimes giving kids a lump-sum is bad, creating wealth kids can't outlive is good. Using $$ up for healthcare costs is bad, making sure the spouse who doesn't have the pension is cared for is good.



If the clients are a little older, become a pro at financial gerontology. The above items were just a few that come to mind. It doesn't really matter where you do these things to start with - there are lots of successful people everywhere. If you come to the BM with a plan of action they'll bring you on & give you the resources to make it work until you choose to jump or stay.



Good luck!