Navigating Succession Planning

There comes a time in every advisor’s career when succession is right around the corner. Every advisor knows just how essential a succession plan is, and yet many advisors don’t take the time to implement one. It’s easy to get caught up in the present and not want to take the time away from focusing on your clients to sit down and put together a plan. But as Winston Churchill once said, “he who fails to plan is planning to fail.”

Another big reason many advisors fail to address their succession plans is because they don’t know where to start or the best course of action. So, for advisors looking for some extra guidance as they start formulating their plan, here are some top tips to follow along the way.

Start Early — Even if you feel that your retirement is still a ways off, it’s better to start the succession planning process early. Why? Because starting early will give you the opportunity to evaluate your operations and find areas where you could be more efficient. After implementing changes that address identified areas of needed improvement, you will increase the value of your business.


  • Continuity Contingency — FINRA requires broker-dealers to have business continuity and disaster recovery plans in order to be prepared for unforeseen circumstances and it stands to reason that individual representatives and registered investment advisors (RIAs) should have the same plans in place. A continuity contingency will lay out a plan as to what will happen to your business and clients if something happens to you. It can also be a great precursor to starting a succession plan and can help you think about your business more objectively as a separate entity.
  • Outline Your Ideal Replacement — While many advisors want a successor that closely resembles themselves, it ultimately comes down to what they think will be best for their clients and the business overall. When it comes time to find your replacement, having an outline will help give you a set of key characteristics and skills to look out for and use to rank prospective candidates. 
  • Business Valuation Insight — A business valuation is a critical part of every succession plan. Getting a comprehensive valuation can help establish an accurate picture of the state of the business. It can also help advisors determine how to best position their business from a growth and profitability perspective. Advisors can also discover key drivers for maximizing the practice’s value, so when it comes time to retire, not only will the business be more valuable, but the advisor will also be better prepared for negotiations by possessing a true understanding of its value.  
  • Familiarize Yourself with Funding Options — There’s a decent chance that you’ll find the perfect successor for your business, but they may not necessarily have the capital to write you that classic big check. Learning about all the different options for funding succession can help ensure that you don’t have to limit your options when looking for a successor.  
  • Planning for a Working Retirement — Not everyone wants to fully retire and leave the working world in their rearview mirror. A succession plan can help ensure that you’re able to keep working, but at a reduced rate while still capitalizing on your life’s work through the value of your business.
  • BONUS: Making a move- Making a move prior to, or in conjunction with your succession plan isn’t often talked about, but it could provide benefits to you and the advisor who will take over your business.  The team at 3xEquity can help you understand the challenges and help secure you multiple offers, all while you remain 100% anonymous. 
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