15 questions to help smooth your succession transition

With 43% of the U.S. advisor population pushing 55 years and older1 and 31% of advisors reportedly contemplating retirement in the next 10 years2, succession planning is on the minds of many. Maybe you are even one of them. Orchestrating a transition that converts decades worth of sweat equity into a dollar figure with the least possible amount of disruption to staff and clients is not for the faint of heart. Time and intentional planning are baseline requirements. But, the financial and emotional rewards of a well-executed transition can be significant for all parties involved: the incumbent, the successor, staff and clients. A defining moment in the succession process is when the ownership equity needle tips from 49% to 51% in favor of the successor. For the incumbent, the business they built from scratch is now majority owned by someone else. For the successor, there’s a new weight of responsibility of owning most of a business. For the overall business, though, it’s an indication of a healthy transition: Typically, it means that many critical role clarity and communication details have been ironed out and are progressing smoothly. What are some of the most important role clarity and communication strategies? In our experience, critical questions to have clarified include:

Role clarity

To help prevent animosity from building up within the team by agreeing in advance on the roles and responsibilities of the senior advisory and the successor at various points durinthe transition, be sure to consider: 

role clarify

Communication strategy

Clear communications about the transition help set staff and client expectations—especially in cases where the senior advisor continues to play a role in the business. communication strategy
The bottom line

Planning a smooth succession requires significant preparation, including detailed role clarity and intentional communication. One of the tests of the success of a succession plan is the moment at which the majority equity in the firm transitions from the incumbent to the successor advisor. For advisors in successful succession plans, the 49% to 51% equity transfer should be a non-event.


1 Source: https://www.fa-mag.com/news/43--of-all-advisors-are-approaching-retirement--says-cerulli-16661.html
2 Source: https://www.investmentnews.com/advisory-firms-threatened-by-attrition-as-advisers-retire-or-go-independent-j-d-power-68278
These views are subject to change at any time based upon market or other conditions and are current as of the date at the top of the page. The information, analysis, and opinions expressed herein are for general information only and are not intended to provide specific advice or recommendations for any individual or entity. This material is not an offer, solicitation or recommendation to purchase any security. Forecasting represents predictions of market prices and/or volume patterns utilizing varying analytical data. It is not representative of a projection of the stock market, or of any specific investment. Nothing contained in this material is intended to constitute legal, tax, securities or investment advice, nor an opinion regarding the appropriateness of any investment. The general information contained in this publication should not be acted upon without obtaining specific legal, tax and investment advice from a licensed professional. Please remember that all investments carry some level of risk, including the potential loss of principal invested. They do not typically grow at an even rate of return and may experience negative growth. As with any type of portfolio structuring, attempting to reduce risk and increase return could, at certain times, unintentionally reduce returns. The information, analysis and opinions expressed herein are for general information only and are not intended to provide specific advice or recommendations for any individual entity. Russell Investments’ ownership is composed of a majority stake held by funds managed by TA Associates with minority stakes held by funds managed by Reverence Capital Partners and Russell Investments’ management. Frank Russell Company is the owner of the Russell trademarks contained in this material and all trademark rights related to the Russell trademarks, which the members of the Russell Investments group of companies are permitted to use under license from Frank Russell Company. The members of the Russell Investments group of companies are not affiliated in any manner with Frank Russell Company or any entity operating under the “FTSE RUSSELL” brand. The Russell logo is a trademark and service mark of Russell Investments. Copyright © Russell Investments Group, LLC 2017. All rights reserved. This material is proprietary and may not be reproduced, transferred, or distributed in any form without prior written permission from Russell Investments. It is delivered on an “as is” basis without warranty.
Russell Investments Financial Services, LLC, member FINRA (www.finra.org), part of Russell Investments. RIFIS: 18831