TRANSITION TALK

When should you start developing your exit plan or succession plan?

The short answer is: start the planning process early. Successful internal succession planning can be a 10- to 15-year process so give yourself adequate time. For advisors who want to sell externally, the planning process should start three to five years before you think you’re ready to actually sell.

Projecting an Off Ramp

As you forecast your exit timeline it’s important to consider factors like cash flow and how much will be required to move into retirement and maintain your desired lifestyle. You should also consider how long it will take to put your successor team in place and when you’ll be able to hand over the reins completely.

One of the best ways to make a timeline projection is to determine how much time you want to—or will realistically be able to—spend productively working in the office, and create a “workweek trajectory.”

We write a fair number of white papers every year. As thought leaders, it is part of our job to share our thinking with independent financial professionals in order to advance the profession. In our consulting work, our clients often challenge us with thought provoking questions which open us to new ideas, help us to improve, and occasionally challenge basic assumptions behind the work that we perform. Sometimes questions are really out of left field and our curiosity leads us to an answer worth sharing.

Last week we had a client tell us that since he had implemented a formal continuity plan, his clients have felt more comfortable adding assets to their portfolios now that their tenure with his business is protected. The stability of continuity is an important cornerstone for continued business growth and client retention.

Currently, FINRA requires that member firms have a Business Continuity Plan (BCP) that is written and can be made available upon request. More recently, the SEC has proposed a rule which would make it unlawful to provide advisory services to clients unless the RIA has a written business continuity and transition plan in place.

FP Transitions has been helping financial advisors document, implement, and annually update their formal continuity plans for over a decade. Now we are able to leverage our extensive network of advisors to help connect you to the right continuity partner for your unique business.

Single owner practices without written, actionable continuity plans and identified continuity partners, are at a disadvantage to larger businesses and firms with built-in succession plans.

As the owner and person that has built a trusting relationship with your clients, you know that it is crucial to protect their wealth as well as your business as a whole. The most challenging aspect of developing a continuity plan, however, is finding the right partner. Of course you want to be discerning when it comes to the person who is going to care for the business you’ve built when you no longer can.

Introducing Continuity Partner Matching!