Succession Planning: What Are You Afraid Of?

Self-examination takes time and effort. Some advisors retain a life coach or counselor to help them work through the questions, a process that can consume many months. Every answer carries emotional baggage that must be sorted through. Even when progress is made toward a concrete plan, many relapse back into the discussion as a means of avoiding tough decisions.

What is causing you to delay a plan that will benefit you, your family, your clients, your employees and your partners? These questions should help you identify the specific fears that are holding you back. If your answers show low confidence in your successors, for example, then you can work on their preparedness. If your answers reveal that you don't believe anyone else is capable of serving your clients well, then you may want to get your head examined by a professional.

Unhealthy dynamics can hobble a firm as it looks to transition leadership. I'm thinking of one firm that had successfully transitioned to the second generation of owners, who had reached retirement age themselves. One of these two senior partners was prepared to exit, but the other was not. The junior partners were not willing to execute a buy-out plan with the one who was ready to transition until the second partner was on board. They wished to avoid assuming a large mortgage to purchase the practice while weighed down by the intransigence of the remaining partner. Without a clear plan, the firm was stuck.

When a firm leader lacks self-awareness, another team member may need to point out behavior that has become selfish, controlling, unreasonable or unrealistic. In an ideal world, a leader would recognize the correct time to retire—but this requires a level of introspection that is not always easy for people near the end of their working lives.

Advisors should set rules of engagement for civil and productive discussions. In my consulting days, I worked with scores of advisors who calmly negotiated the numbers and terms then suddenly exploded at some perceived personal slight. It's important to understand how painful this process can be for advisors who have dedicated their lives to the business. In many ways, retiring advisors experience the five stages of grief as outlined by psychiatrist Elisabeth Kübler-Ross: shock and denial, anger, bargaining, depression and finally, acceptance and hope.

As anyone who has witnessed or lived through this mourning process knows, those who are grieving can lash out in anger. Recipients of this wrath, also invested in the health of the business and their own futures, often respond aggressively—adding fuel to the fire.

It takes patience and open communication to navigate change. Retiring advisors must unpack their emotional baggage and put together a workable succession plan. Younger advisors hoping to take over a senior advisor's practice face the most challenging experience of their professional lives: coaching respected leaders through the emotional stages of the transition so that, in the end, both have what is best for themselves, their clients and the business.