Clients Value Multigenerational Teams
Clients want confidence that their service experience will extend beyond the career of their primary advisor. They seek stability, continuity and long-term relationships that span generations. This is one of the key reasons we see significantly higher net new client growth rates at multi-owner firms compared to single-owner firms. A structured succession plan not only strengthens the firm’s future but also reassures clients that their financial journey will be supported for decades to come. Without it, many clients hold back on referrals.
Lay The Foundation For A Smooth Transition Of Leadership
Careers run in a cycle that often coincide with age. But in the financial services industry, careers are more likely to wind down than to simply end. A diverse, multi-generational ownership team allows older leaders to take that step back and find a gradual exit while their team steps up and takes the reins. The share of equity changes along with the presence and contributions of its holders. Additionally, the mechanism and practice of smooth ownership transitions protects the firm from any potential disruption from the sudden exit of an owner. A strong, multi-owner equity structure ensures that the sustainability and value of the firm does not hinge on any one individual.
Onboard Experienced And Established Advisors
An established strategy for adjusting the ownership team allows you to leverage equity in the recruitment of experienced advisors who may come with their own books of business. The value of new clients can be more easily evaluated and translated into appropriate compensation for the new advisor—both as salary and equity share—to account for the contribution to overall firm assets.
Leave Avenues Open For External Succession Options
Data shows that multi-owner firms are more valuable than single owner practices. An established equity process and diverse ownership team makes it easier to explore additional growth through external equity partnerships like a merger or Sell and Stay® arrangements. Not only does the firm present a more attractive investment opportunity, but the established equity value and agreements make it easier to evaluate an owner’s impact on the business and its profits. This improves the process of integrating ownership circles, leadership teams and business operations.
The Blueprint For Equity Success
To take full advantage of these strategic benefits, firms need a well-structured equity plan. This roadmap should include:
• Intention: Define your goals for succession, identify desired ownership traits and set a vision for the firm's future.
• Clarity: Communicate equity opportunities and set clear expectations for performance and behavior.
• Guidance: Nurture talent by fostering a wider business perspective beyond individual production. Demonstrate ownership mindsets and how business decisions affect long-term profitability.
• Compatibility: Test ownership alignment through increased leadership responsibilities, synthetic equity, or a small initial equity transfer as a trial period.
• Graduality: Allow for a staged process of equity accumulation to ease transitions and make investments more accessible for new owners.
• Compensation: Clearly delineate ownership and licensed professionals’ compensation, distinguishing between role-based salary, performance-based bonuses and profit share for equity ownership.
• Flexibility: Plan for adjustments to accommodate life events, partnership changes, or accelerated investments.
• Documentation: Memorialize the equity plan, ownership agreements and corporate governance in writing to ensure clarity and continuity for future generations.
• Client Communication: Clearly communicate with clients the firm’s evolution to a multi-generational ownership team
Securing Long-Term Success
Business ownership requires a commitment of time, energy and financial investment. But with a clear equity roadmap, firms can attract and retain top professionals, develop next-generation leaders, perpetuate the ownership cycle and accelerate growth.
By taking these steps today, you’ll position your firm for long-term success—while building a legacy that lasts for generations.
