Is ‘Intrapreneurialism’ the Solution for the Succession Bottleneck in Financial Planning?

There’s never been a more ideal time to sell a wealth management business, yet at the same time, there has never been a more difficult time to afford one. With valuations and the stock market hovering around all-time highs, and tax rates at all-time lows, it’s no wonder leaders and founders of larger firms want to take some or all of their chips off the table.

Our profession struggles with attracting the next generation of leaders and entrepreneurs. One key reason is that businesses have become so pricy that it is nearly impossible for a younger person to absorb the sheer amount of debt required to buy a firm out. This is one contributing factor in the succession bottleneck in our business; the next generation is not signing multi-million dollar notes, putting their family’s financial security and personal cash flow needs at risk.

We see an influx of creative approaches to solving this industry-wide challenge, including one of my favorites, which we refer to as “intrapreneurialism.” This unique approach gives an up-and-coming leader many of the benefits of business ownership without putting their finances at risk. Here are the key concepts behind the intrapreneur:

What is an Intrapreneur?

An intrapreneur is:

  • Someone who is given the latitude to manage and run a firm without having to take on personal debt to to do so
  • Someone who makes critical decisions that drive the growth of a firm without having to invest their capital into expensive marketing plans, advertisements and lead-generation campaigns
  • Someone who manages the bottom line profitability and is incentivized by sharing in the profits and growth of the firm
  • Someone who thinks like a true business owner and treats the business as if it is their very own
  • Someone willing to take charge 'and ownership' of a business without having to write huge checks or take on ridiculous amounts of debt to buy the business

If you’re an up-and-coming wealth manager, what’s your personal growth strategy? Does your current career path include opportunities to be creative and have an impact on your firm’s bottom line? By the same token, if you own a firm now, how can you help the next generation share the upside without taking on the risk of the downside?

When it comes to transitioning ownership of a financial planning business, it’s possible to have the best of both worlds. Entrepreneurship will never go out of style, but how we get there today may require a different mindset, and that’s where the intrapreneurial model fits perfectly.

Stuart Silverman is President of Bluespring Wealth Partners, a company focused exclusively on acquiring registered investment adviser and wealth management firms through streamlined and unique succession strategies.