Successful Successions

Dear J.J.,

Why is clear communication around intentions and considerations so hard in many organizations? You needn’t answer that rhetorical question. Clearly the partners have some ideas about what they are going to do; you just haven’t been brought into these discussions. Yet, you are going to be significantly impacted by what’s happening.

Here is a novel idea – ask them!

Will they perceive you as greedy or ungrateful? We have no way to know. You can’t worry about someone else’s response, you can only put forth what you might need in this equation.

Does this mean you don’t ask in a professional and courteous way, while acknowledging the great opportunity you’ve been given and how grateful you are? No, you can also share these perspectives. The conversation could go something like this:

I know we are still about two years away from (advisor’s) retirement and I’m pleased to have the opportunity to work with him/you in managing clients. I know the goal is for me to take over this segment of the practice. While I am excited about the future possibilities, I would be in a better place if I understood the dynamics of this transition. For example….

Then add in the questions you have.

It’s possible they haven’t worked everything out yet. In my experience, many times people wait until all of the boxes are checked and they know the answers to everything before they share anything. They may become worried about saying something if things might change. Be prepared for this. They may not be ready to talk with you about specifics. But bringing it up will alert them that you are concerned and are considering different impacts.

If there are non-negotiable aspects for you – i.e., a price you would have to buy-in at, limitations on what you can and can’t do, or restrictions on how much you can earn – you want to raise these for their consideration. Again, you are not making demands but you are letting them know you are also thinking this through and have idea about what would, or would not, make it attractive for you.

When it comes to succession planning, both parties should have full disclosure about what is expected to take place, what some of the obstacles might be, and the short- and long-term expectations. The more discussions you have as the succession process is evolving, the more you will identify areas of disagreement or misunderstanding.

Once you have your agreement, document it. Document everything. I can’t stress enough how many firms we see that have good intentions with poor documentation. Everything should be in writing so there is no room for future misunderstandings when you take the seat of this senior advisor and work more closely with the existing partner.

Dear Bev,

I am so angry. I am having a hard time writing this without swearing.

I have worked for an independent financial advisor for seven years. I joined in an administrative role, received my CFP® and have taken on many of his accounts and now manage the financial planning for almost every one of them.

Today he tells me he is selling his client book to a larger firm that we’ve worked with for some time!!

I had no idea these conversations were happening. What happens to me? He told me not to worry; there would be a place in the new firm for me and that the clients would still be looking for me. I probably would not have joined him had I known this was a long-term plan. I’m having a hard time not quitting. But I feel an obligation to our clients to make a successful transition. How does someone do something so nefarious and sneaky?

E.B.

Dear E.B.,

I understand your frustration and your experience that you had a dramatic shift take place when you believed you and your advisor were in alignment. Where was the documentation? Where was something in writing committing the transition to you? What was your senior advisor’s expectation for the long-term?

This sounds to me like another situation where succession planning was not made clear. He may see you as an excellent hire who has been able to grow and change with his practice and his clients, but he may not view you as the person to take over the practice. It seems to me there has been seven years of assumptions made on your part that may not have connected to the assumptions made by the advisor. Or, there might have been a change in his conditions, financial or otherwise, that forced him to make this decision. In any event, it shouldn’t have come as a surprise to you and left you feeling sandbagged.

Succession planning is not much different than a merger or acquisition. You have to be sure the goals are aligned, the agreements for what we are doing, when and how are made and the path to get there is clear. Not only should everything be clear, but it should be in writing. Anytime someone has expectations about what is supposed to happen, or going to happen, it’s important to clarify them in writing but this can’t be overstated when your career, and your future is at stake. There might be succession opportunities for you in the new firm but I’d make no assumptions this time. Have a frank conversation with the new leader of the firm and find out his/her intentions and then follow up in writing so everything is documented.

Beverly Flaxington co-founded The Collaborative, a consulting firm devoted to business building for the financial services industry in 1995. The firm also founded and manages the Advisors Sales Academy. She is currently an adjunct professor at Suffolk University teaching undergraduate and graduate students Entrepreneurship and Leading Teams. Beverly is a Certified Professional Behavioral Analyst (CPBA) and Certified Professional Values Analyst (CPVA).

She has spent over 25 years in the investment industry and has been featured in Selling Power Magazine and quoted in hundreds of media outlets, including The Wall Street Journal, MSNBC.com, Investment News and Solutions Magazine for the FPA. She speaks frequently at investment industry conferences and is a speaker for the CFA Institute.

More Behavioral Finance Topics >