The single, biggest threat to the continuity of an independent financial services or advisory practice is the lack of formal plan to protect the clients, cash flow, and value in the event of the sudden death or disability of the primary advisor. And the biggest challenge to obtaining protection is finding a great continuity partner.
If you’re lucky enough to have a team working with you, that is, of course, the ideal place to start looking for your continuity partner–you already know each other, and there’s client familiarity as well. A member of your team is often in the best position to carry on operations with the least amount of disruption if something happens to you.
That said, 95% of financial advisory practices have only one owner. If a team member isn’t available, the next best place to look for a continuity partner is within your networks and community; and you’ll probably want someone who is local. Take a look at the advisors in your area and in the professional circles you’re a part of. Again, you’re looking at people you know which makes asking questions about their practice less awkward.
Another great resource for finding the best match for a continuity partner is your BD or Custodial representative. With their many contacts they’re able to connect you with similar advisors that may also be facing the continuity problem.
What exactly constitutes a good fit? You should examine a potential partner’s investment style, business philosophy, client demographics, experience, and choice of BD or custodian is also important. An advisor that closely resembles you and your business style in these areas will make for the smoothest transition, and is most likely to continue to service your clients in a way that they’re used to.
Another important consideration is revenue and cash flow. Similar sources of revenue between your practice and a potential partner’s will again ensure a smooth transition in client service. For revenue, though, ideally, you’d like to pair with someone who has higher revenue than you do (think at least two to three times as much) and will be able to easily incorporate your operation into theirs, on a moment’s notice, and can support continued growth.
Once you’ve found your partner the hard part is over. What’s left is to figure out are the deal terms and to define the triggering events that set the plan in motion. After the anxiety of figuring out who will be there for your clients when you’re gone is settled, the rest is less daunting than it seems–it’s just paperwork really.