Managing Roadblocks Along the Next-Gen Ownership Path

Posted by FP Transitions on Dec 8, 2020 7:24:01 AM


When it comes to planning for the future, flexibility is important. Change is bound to happen–whether we see it coming or not. Planning for future growth and ownership of a business is no different. As a next-generation professional in this industry, being able to adjust your course while keeping your eye on the ball is imperative.

In the past, we’ve written about how founders and existing ownership teams can prepare for and adapt to changes that might come their way. While next-generation professionals may encounter similar roadblocks, you will face unique challenges of your own. In the current phase of your career–building experience, relationships, and leadership potential–the course correction discussion is less about planning for the future of a business as an owner, and more about carefully plotting the future of your career.

Your path to business ownership isn’t necessarily tied to any one firm. This is both your challenge and your opportunity. A straight path within a single firm is, of course, the easiest way and allows you to build up your client base, but your experiences, perspective, and ambition make you an asset to any team.

Roadblocks can be managed as mere bumps if you keep your eyes open and know when to make the appropriate adjustments. In our work, there are three common reasons for a new financial professional to change course:

  1. Hesitant founders
  2. Uncommunicated exit plans
  3. Your life events

Hesitant Founders

Working with a hesitant founder presents one of the easiest bumps to predict. These particular owners will put off initiating succession or avoid the subject entirely. They often worry about sharing control and allowing transparency into the company financials. They might also find the process too daunting or misunderstand how it works.

Communication is key here; be transparent about your desired path and be respectful of their concerns–try to work through them together. Come to the conversation armed with reasons why you would make a good owner and a knowledge of how the internal succession process works.

If your efforts don’t result in a path forward, you could consider whether your career path would be better facilitated as part of a different team and consider looking for a new company to join. In understanding common hesitations, the process of becoming an owner, and your own value within a new business, you can make your ownership intentions part of the onboarding conversation from day one.

Uncommunicated Exit Plans

It is possible that the owners have plans for the future of the business that don’t include internal succession. This is, of course, their prerogative. In this case, if you learn of these plans early enough, you can talk with the owner about the benefits of internal succession and declare your ownership aspirations to see if it will change their mind. However, especially if the sale is already in progress, there may not much that can be done but to adjust your expectations or priorities to fit within the new path of the business.

Your value to the business doesn’t change with new leadership and you can seize the opportunity to have the ownership conversation with the new owners. If your priority is staying with the firm, and there is not an immediate ownership opportunity you might adjust your definition of success so that it doesn’t necessarily mean ownership right away. Or, you can seek to fulfill your goals at another firm.

Your Life Events 

Finally, significant changes in your own life are among the most likely things that can impact your career path. Getting married, starting a family, buying a new house, and relocation are all events that might require adjustments to your career plan. These could mean an extension to your ownership timeline goal, a change in the company you work for, a modification to your financial risk tolerance, or a shift in your desire for ownership altogether. All of these life changes should be considered alongside your professional priorities and aspirations.

The bottom line is that your path is your own. You are not locked into any one decision or particular way of getting from point A to point B in your life or in your career, and you aren’t doomed to start over from square one if you change your mind. The ownership mentality, operational proficiencies, relationship-building skills, and professional connections you build in one place are just as beneficial to the next business. They can contribute to your ownership goals wherever you choose to land–whether it’s as part of a larger firm or in starting your own practice.

The key to keeping momentum and achieving your goals is to maintain communication and transparency wherever you go.

WATCH: Jumpstarting the Ownership Conversation

Topics: Succession Planning, Multi-Generational Ownership, Next Generation