It is often said that the most important asset an organization can have is its staff, so it would seem logical for an organization to have a plan in place for when staff move on taking their skills and knowledge with them. This is not always the case however, according to a white paper by SEI and FP Transitions, less than half (45%) of advisors polled have a continuity plan in place in the event of an unexpected departure or leave of absence. This is despite the claim that 99% of independent financial services and advisory practices go out of business when their founder retires.
The white paper, titled, ‘Acquisition and Succession: Shift Your Focus from Retirement to Growth,’ surveyed 771 financial advisors to gain insights on their acquisition, succession planning, and continuity planning activities. It noted that firms must increasingly view succession planning as a growth strategy not a retirement strategy, and reveals that while nearly one-third (32%) of advisors claim to have a succession plan, only 17% have a binding and actionable agreement. This data points to the need for advisors to re-assess their succession planning goals and strategies.
"Advisors are beginning to realize that succession plans and continuity plans can actually become growth tools,” said John Anderson, Head of SEI Practice Management Solutions, SEI Advisor Network. “By taking the time to plan for the future, advisors are giving themselves a key competitive advantage in the present. The process gives them a clearer picture of their firms' overall health, prioritizes finding a new generation of talent, and sends the message to clients that the firm will be viable for years to come.”
"Succession planning isn’t just about figuring out who’s going to take over when you’re gone," said David Grau Sr., President and Founder of FP Transitions. "It’s about building a business that will support your long term vision, and which will continue to serve clients even when you’re not around as much. Whether that means preparing the firm for acquisition or extending ownership to the next generation, continued growth is essential to a successful transition."
The data suggests, however, that most advisors have given thought to succession planning and continuity planning, even if they do not currently have all of the tools needed to execute a plan/strategy. Of those without a business continuity plan, nearly three-quarters (69%) plan to implement one over the next few years.