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This article is the first installment in a multi-part series exploring the issues Jim Whiddon faced as he went through the process of selling his practice.
In 2012 at age 52, after almost three decades in financial services, I decided to sell my Dallas -based independent registered investment advisor (RIA), JWA Financial. Why would I trade in the peak earning years of my career after I successfully positioned my firm to take it to the next level? In a series of articles, I’ll explore a multi-faceted topic weighing on the minds of many advisors – succession planning.
I did not sell my firm because it was in trouble. We had healthy cash flow, and the stock market was at an all-time high. My firm had recently invested in a rebranding, including new logos and marketing materials, and built a new (and expensive) website. I had the perfect staff in place – the best I had ever assembled. The firm had not just survived the global financial crisis, but it was reaping the full benefit of the “leaner and meaner” financial positioning the crisis had necessitated.
Succession planning is one of the hottest subjects in our industry today. Across all channels of financial services, advisors who are 60 and older control more than $2.3 trillion in client assets, according to Cerulli Associates Inc. But as we often tell our clients, big decisions are about more than numbers. Determining the best next step for your career and your firm is a decision that should be made with your family, team and clients in mind.
I considered and researched many factors over a period of several years when creating my succession plan. Like many small business owners, my firm was the largest asset in my personal portfolio. It was a privately held, illiquid position. In this sense, I viewed the decision as a pure risk-or-reward equation that gave me the opportunity to liquefy and diversify my assets by merging into a larger firm. But this was far from the only reason to consider the opportunity. I felt that an analysis of strengths, weaknesses, opportunities and threats would help me organize my options and survey the landscape on a macro and micro level. This series will address these and other issues in depth, in the hopes that my insight benefits others in my position.