End scene: Succession planning for our clients and ourselves

"There is no real ending. It's just the place where you stop the story."

Frank Herbert

Succession planning touches every part of our clients' lives. Whether they hope to protect a business, their family or a charitable organization, our clients do not spend a lifetime building something they are proud of just to watch it fall apart in their absence.

If our client is looking to safeguard a business, this means they must find a new generation of owners or a next wave of key employees. For family protection, our clients will need our help ensuring their family members are treated equitably and are able acquire the treasured assets set aside for them. Whether this means passing cherished real estate or other family heirlooms down or just providing a generous cash donation, our goal as advisors should be to transfer these assets to our clients' next generation free of encumbrances, like debts and taxes.

What countless advisors do not realize is that succession planning is just as important to themselves as the clients they serve. Succession plans are extremely important to financial advisors since they maximize the value of their most important asset their practices. Many consider succession planning yet fail to follow through by proactively taking steps toward setting up a continuity plan. One tool I like to employ when approaching discussions on succession planning with other advisors is the Million Dollar Round Table (MDRT) Decision Tree a tool members can run through to find the most effective way to tailor their succession planning goals to their own practice.

This tool walks advisors through the steps of determining practice value, identifying a prospective buyer and executing the succession plan. Identifying a successor who is a good fit is most often the hardest aspect of putting a plan in place. This process takes more than just a handshake. According to a 2007 survey by LIMRA and Moss Adams, finding someone you trust to provide the same quality services to your clients is the most important factor in planning for a successful transition.

Getting involved in industry associations and attending industry events is one way to go about finding a successor who shares similar key values, especially for advisors who do not have family members in the financial services industry. Presence and participation in groups such as MDRT is important and can lead members to younger advisors who would be willing and able to take over a practice.

Listening to our own advice can sometimes be one of the most challenging tasks we take on. "Riding it out," or working the business until you die is not the optimal way to handle closing the door on your financial profession. None of us would advise our clients to handle their own businesses this way. As advisors, we need to utilize the same types of estate planning instruments, contracts and agreements we urge our own clients to use when thinking about planning for their futures.

For more from Philip E. Harriman, see:

Link building

Social media and your clients

Take care of your clients