The Elements

By Andrea Schlapia   |   September 17, 2012

Passing The Torch – Succession Planning, Part I

Categories: Blog, Strategic Planning, Succession Plan

Passing The Torch

 

Your succession plan is not just a blueprint for retirement, selling your business or a catastrophic continuity plan focused on legal issues and the best price.  This is a plan for long-term sustainability of the firm; a vital strategic process that nurtures and develops rising leaders in order to increase transferability and continue the legacy of the practice.

In our two-part series of succession planning, we will look at:

  • Motivating you to start creating your plan and empowering you to do so with little to no overwhelm in part one
  • An in-depth review of the key factors to succession to guide you through the process of successful implementation

The Succession Strategy

Purposeful planning is essential to the entire succession process and helps build strategies that benefit both the individual and the overall business.  Make sure you involve the right people, invest in the right tools and make the right decisions in order to achieve results.  The following provides an outline of the steps to incorporate in your succession strategy:

  • Evaluate the practice and define practice goals
  • Prepare yourself for transfer
  • Prepare the practice for transfer
  • Choose your successor(s)
  • Focus on development, refinement and planning
  • Prepare your clients for transfer

Common Misconceptions of Succession Planning

What It Is:

  • Develop talent to move forward
  • Identify long-term goals
  • Improve readiness/build a team to fit practice

What It Isn’t:

  • Identify immediate understudies
  • Unchanging firm structure
  • “Back-up” candidates
  • Catastrophic buy/sell agreement

The following emotions and thoughts often prevent business owners from preparing for succession:

  • Fear of lost identity/control
  • Fear of mortality/aging
  • Potential jeopardy to your family’s financial security
  • Fear of not finding an acceptable successor
  • No financial security for employees and clients
  • Grief over separation from the business

Business owners should view succession planning as:

  • Sustainability of the practice
  • Ongoing supply of well-trained talent
  • Available resources to aid future needs
  • Well-motivated team to continue your legacy
  • Improve all process
  • Improve service offerings

Part II of succession planning will elaborate specifically on each step outlined above.  The actionable developmental steps provided will cover the process from start to finish.  

The Tranquil Transition

Successful execution of your plan requires resilient structures, effective processes and dedicated talent in place to carry out the strategies defined above.  Implementation will guarantee the long-term sustainability of your practice that you have worked so hard to ensure.  Keep the following points in mind throughout the transition:

  • Blur the line between incoming and outgoing team members
  • Focus on improving communication
  • Clearly define behavioral steps
  • Utilize evaluation processes for real development of the succession plan

Always Be On The Lookout

Be adaptable to inevitable changes occurring in the practice; evolution not revolution.  There are both challenges and unforeseen changes that have the ability to restrict a good succession plan.

  • Challenges – Compensation for purchasing ownership, share valuation, percentage of equity to transfer, how to share decision making in management, financing new owner’s share purchase and cultural fit.
  • Unforseen Changes – Team roles, clients and most importantly, updating your succession plan during the building and execution stages.

The financial elements of a succession plan are significant, but not all encompassing.  The non-financial aspects influence the success or failure of the plan; they are most harmful if neglected.

The value of extraordinary human capital and robust processes allows evolution to occur evenly and without damage.

Don’t join the 50% of advisors that have not written a succession plan*

Make sure your business is one that others will want.  Develop the next generation of advisors that best fit the practice in order to increase transferability and continue your legacy.  The more indispensable you are, the higher the value your business will be when you leave.

The steps you take to define your succession plan, more specifically processes, clear roles and career paths, are as good for business today as it is tomorrow or 10 years from now.  If you didn’t start early, start now!

A successful succession plan embodies a talent development mindset and establishes a performance culture throughout your firm.  If you can visualize the impact of a stellar succession plan, you need Ironstone to help you implement it!

Ironstone will evaluate your existing succession plan and strategize with you to gain optimal benefits.  If you haven’t implemented a succession plan, we will collaborate with you to develop a comprehensive plan.  We specialize in identifying gaps in your existing plan and will collaborate with you to develop solutions that are parallel in achieving the results your desire.

Questions or Comments? Let us know your thoughts.

 

• Email us at info@ironstonehq.com
• Call our office at 800-917-8020
*2012 In Advisor Solutions Succession Plan Study


Andrea Schlapia
Organizational Development and Human Capital

Andrea Schlapia, RCC™, HCS, sHRBP, is the Founder and CEO of Ironstone, which represents the culmination of her 20+ year career within the financial services industry. Her experience began as a financial advisor evolving into a consultant coach for advisors entering the field. This ignited her passion to support others through learning and development of best practices in order to achieve substantial results. To this end, she followed her desire into positions of senior-level practice management specialists for Dreyfus, Prudential, and DWS Investments prior to the realization of Ironstone.  Andrea’s focus is on practice management strategies to enhance and improve both business and personal life.

Andrea identifies 4 key performance areas known as the Fundamental 4™, which are required to design, develop, and sustain a successful business. Through coaching sessions and speaking engagements, she captivates her audience with interactive, high-energy presentations which are built with “how-to” strategies resulting in real-world implementation for significant impact. Andrea has been featured in multiple publications and audio broadcasts as a specialist and distinguished spokeswoman in the financial industry.

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