RIA Rising

Succession Selection: What Path Would You Pick?

Wondering what sort of succession plan you need for your advisory practice? Pick a card.

In Boston today Fidelity Institutional Wealth Services, its RIA unit, launched the first of five meetings it plans to hold across the country with its advisors on the subject of planning for and carrying out succession. It’s a subject on the minds of more advisors as the pool of professionals continues to age; three-quarters of those who responded to a Fidelity survey last year said they either didn’t have a plan for continuing their business when they were gone, or they had a plan they hadn’t implemented.

Fidelity advisors and prospective advisors who are invited to the program will play a card game as part of the exercises in evaluating their options. Called the Track Selector Game, it consists of 15 cards with various statements about practice values that an advisor might feel are very important, somewhat important, or not at all important. They include such topics as maintaining the current culture of the firm, maintaining its brand and name, and the value of growing with like-minded partners.

Ranking the cards according to importance helps an advisor decide which of three succession tracks he may belong on: merging with another firm and staying involved in the practice, transitioning the ownership of the practice internally, or selling the practice and moving on. Fidelity also provides a workbook as part of the program to help advisors determine how ready they are for any of the succession tracks.

“What we’ve tried to do is fully acknowledge there’s a blend of art and science to this,” says David Canter, executive vice president and head of product management and consulting at Fidelity. Advisors play the game in groups of a half-dozen or so; the conversations that emerge at the table help with sharpening the focus of an individual’s possible plans. Some advisors may find possible partners at their table, Canter says.

“I believe advisors are going to be collaborating a lot more for scale reasons, for client service reasons, and maybe some of this can spawn mergers,” he says.

Of course, there are some advisors who don’t see succession as much of an issue; 43 percent told the Fidelity survey last year that they don’t plan to leave the business or retire. They may find themselves at odds with their own clients, however. Fidelity’s poll of mass affluent investors earlier this year found that 54 percent want their advisors to plan for succession.

“You’re in it for the long haul, but at some point there has to be some type of transition,” Canter says.






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