TRANSITION TALK

Over the last ten years, increasing numbers of advisors have begun the process of creating sustainable businesses. Many advisors started out as a book or a practice—one-generational models. They took steps to create much more valuable, multi-generational businesses by focusing on enterprise strength and setting up or restructuring essential business structures.

The M&A marketplace is becoming increasingly competitive. Businesses need a strong value proposition to step away from the crowd. Owners who have taken steps to work on building their enterprises are in the best position to leverage their unique business aspects to access more growth opportunities and become successful acquirers or merger partners. 

As more wealth management businesses look to internal succession, more new owners are being created. As a next generation advisor, you should consider whether ownership is the right path for you, and it is important to understand what ownership entails. Owners of a privately-held business, even with a minority position, enjoy several rights and privileges in exchange for their investment in the company, but they are also responsible for meeting certain obligations.

The following rights and responsibilities apply to all owners whether the business is a corporation governed by bylaws or a limited liability company with an operating agreement.*

Earlier this month, I attended the San Diego chapter FPA Symposium. Along with case studies and market information, there were presentations on program updates for the next generation of advisors. I thought it was especially relevant to hear about their NexGen focused resources in light of Michael Kitces’ article published last week on our profession’s looming talent shortage: Competition For Talent And The Rising Shortage Of Next-Generation Financial Advisors. 

Here are some notable programs the San Diego chapter has set up with a focus on the next generation and getting future planners excited about a career in financial services.

Last week, FP Transitions attended the NAPFA Spring Conference in Phoenix, Arizona which wrapped up on Saturday. Thank you to all the clients and visitors who stopped by to visit with us. We always love hearing your questions, stories, and plans.

The Next Generation Showing

I was happy to see so many young people involved this year. NAPFA’s Genesis group–members 33 old and younger–was well represented and students from Kansas State University and Texas Tech University were working as event volunteers.

I had the opportunity to speak with several of them, and they said that in meeting so many advisors, they were learning what different job environments were available; they could work at a business with 100 advisors, join a solo practice, or anything in between. In doing this exploration, they have a better chance to start out on the right foot. It was exciting to see the early sparks of motivation and passion in these young advisors-to-be. 

Family Businesses

Several advisors stopped by the FPT booth to talk about bringing their son or daughter into the business. Having worked in a family business myself, I know how rewarding it can be. There are special considerations, though, and as advisors brought up, situation-specific concerns: How do we balance work and family? What impact does that have on the kids who aren’t in the business? How will it affect an office with non-family staff and advisors?

Last week, FP Transitions attended the FPA Retreat in Phoenix, AZ. We want to say a big thank you to all our clients and the visitors who stopped by to talk with us. We had a wonderful time speaking with new business owners, exiting advisors, and many others at a variety of points in their careers and growth journeys.

“Succession Challenge”

On Wednesday, FPT president and founder David Grau Sr., J.D. joined Michael Shockley, JD, CFP™ of RGT Wealth Advisors and Michael Futterman of Janus Henderson Investors on a panel addressing the “Succession Challenge,” moderated by Julie Littlechild of Absolute Engagement. The discussion featured data from a newly-released FPA / Janus Henderson study.

While 73% of advisors don’t have a written succession plan, the good news is that an increasing number of advisors are setting a goal for the value they want to realize for their business and 75% feel they are on track to meet or exceed their goal.

Working at a financial services firm can be a rewarding choice for the next generation of advisors. You can have real impact in people’s lives as you help clients set their financial goals and see them succeed over time. It is an environment where there is constant change and continued opportunities for learning. And, the financial services industry offers a lot of choice in terms of specialization, type of firm and location. It is important to find the right company and team to work with to put your career on the right path.

During a job interview with a potential firm you will have the opportunity to ask your own questions about the business and the team. Asking the right questions shows you are intelligent and engaged, in addition to providing you with critical information to help you make the right choice for your career.

You will, of course, have questions to ask specific to your own goals and concerns, but here are three relevant to every advisor's career that should be on your list: