Starting the Succession Conversation

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As a consultant working closely with financial advisors, I support numerous study groups of next-gen advisors who struggle with getting the founding advisor to talk about succession or equity sharing. The founder is waiting for the next-gen advisor to show interest, and the ensuing stalemate results in either starting the process too late or not at all. The next-gen advisor leaves for better opportunities where they can earn equity.

Here’s how to avoid that outcome.

Planning for succession or the sale of a business is one of the hardest steps for a small business owner to take – and, more often than not, it is a topic that is avoided for too long. For the founder (“Gen 1”), succession or equity sharing is a challenge because it means giving up some level of control, increased transparency, sharing profits and allowing an employee to enter the “inner circle” as an owner.

Succession planning done right has many benefits for the owner, the clients and other stakeholders, such as increased time to do what one is passionate about (at work and personally), sustained long-term growth, the ability to attract and retain better talent, attract a younger clientele, greater service capacity, and less disruption to the business as Gen 1 exits (which leads to a higher value).