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succession planning handing off keys

Succession Planning for Advisors

Successful succession planning requires time and preparation.

The aging advisor reality is prompting business successions across our industry. Some of these are hastily enacted shotgun marriages, while others are thoughtfully crafted transition plans that are relatively seamless to clients. As heightened fiduciary requirements for retirement accounts and the amount of time needed for compliance and recordkeeping continue expanding, many seasoned advisors are considering retirement. Yet not all are doing so thoughtfully, strategically or even in their clients’ best interests. Some have turned to shopping their clientele as if their books of business were a commissionable trade. Years of trusted partnership and relationship are virtually disposed of with a signed agreement, and the party most disrupted tends to be the client. Certainly, it is hard to defend this approach as putting client interests first.

Working in an eight-decade-old firm, we have witnessed hosts of business transitions and observed some best practices for ensuring smooth, effective handoffs. The first step is adequate time and preparation. It is critical that a retiring financial advisor provide sufficient lead time to allow for client introductions, client financial plan discussions, inter-client connections, etc. This cannot be done overnight, but it also does not necessarily require years. Rather, development of a carefully outlined marketing and communications plan can systematically permit meaningful introductions. 

Often this begins with a letter campaign to announce the transition, introduce the new advisor and team members, and set expectations for how and when clients will meet the new team while also establishing a retirement timetable. Photos or video can be effective to introduce new faces and names. Part of the transition necessarily includes a review of the departing advisor’s service model and client “tiers” and determining potential “gaps” with the inheriting advisor’s service model or team. While clients would likely not expect the two to operate identically in all respects, some continuity of critical components is necessary, these areas of continuity should be identified and codified during the client introduction phase. It is also during introductions that any potential “gaps,” such as age, gender, client industry/business knowledge, etc., can be identified and planned for.

The next key step in effective succession planning is client background and plan review between the retiring and inheriting advisors. During this phase, client files, financial plans, CRM notes, etc. are reviewed and absorbed. It is essential that the inheriting advisor learn where the institutional knowledge resides—whether in staff, file cabinets or notepads—so they can learn as much as possible about clients and understand any information gaps. This will enable the new team to start from a current base of knowledge and build upon that foundation as they begin the client planning and review process. Also during this time, key centers of influence introductions and connections should be made. Consider the patient file that your doctor keeps. While any new doctor reviewing that file would have a relationship gap with you initially, ideally all the key history is captured and recorded in a format that enables them to quickly perform a thoughtful exam and make necessary recommendations based upon historical data. Advisor transitions should aim for the same type of seamless file transfers.

After this step, it is important for the inheriting advisor to take the lead and establish a service model and communication stream with each client. This is an opportunity for the new team to “onboard” their new clientele while also realizing that this group has been with the firm and understands the reports and procedures, etc. The key differentiation is that the new team can build upon the past service model and modify/change/adapt it to their practice and current client needs. Change often begets further change, and having both the client and the new advisor commit to a fresh path forward will go a long way toward quickly establishing a trusted relationship.

On a recent flight back from New York, I saw our pilot emerge from the cockpit for a few minutes to stretch his legs and kibitz with the flight attendants. It occurred to me then that had I not seen him in the aisle, I likely wouldn’t have even known that a change of control had taken place. From a passenger’s point of view, the process was transparent and seamless. As with substitutions of airline pilots or any other leaders, successful advisor transitions require a very deliberate and visible plan for success. After all, financial planning is the ultimate long-haul flight, spanning multiple generations. Proper continuity planning ensures a smooth and safe journey for all parties toward whatever final destination is defined, and can help ensure the client’s best interests are achieved through the changes.


Andrew Crowell, vice chairman of D.A. Davidson & Co.’s Individual Investor Group, serves as executive leader of D.A. Davidson’s community relations functions, including acting as the company’s private client group liaison for the Securities Industry and Financial Markets Association (SIFMA). He is a co-manager of the firm’s California region and also sits on the board of directors for D.A. Davidson’s parent company, D.A. Davidson Companies.

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