From One Millennial to Another: Advice on Being the Succession Plan

Journal of Financial Planning: December 2015


Every adviser in the span of their career will undoubtedly come across a client or two who refuses to plan for, or even speak about, slowing down.

We tell these clients how important it is to have a plan in place so that when the time comes to retire, it’s a smooth transition. We warn that the time may come well before they expect it to in the event of a health issue or other occurrence that renders them unable to continue working.

We ask ourselves, “How can I help them understand?” Rarely do we realize that we, as advisers, should also heed this advice.

Much of the commentary around succession planning for the advisory business is focused on having the plan, and rightfully so. Cerulli reported in 2014 that nearly half of advisers were over age 55. A different 2014 Cerulli poll confirmed that 98,500 advisers, or 32 percent of the population, planned to retire or exit the business in the next 10 years.

Unless planning to dissolve their practice, all of these advisers will need a succession plan in place to ensure the future of their business, as well as guarantee that their clients will be taken care of by someone they know and trust.

Retiring advisers must find this trusted individual to someday take over, but little is said about how to do so. In fact, very few young advisers are entering the financial services profession today. Accenture found that only 5 percent of the advisers working in the United States in 2014 were younger than 30. But that 5 percent will be the successors.

And for those of us who are the succession plan, advice on how to navigate this path can be even more scarce. I myself came into the financial advisory profession in 2010 knowing that, some day, I might take over my father’s business. From day one, we agreed that I would first work to build my own practice—knowing that this would be paramount to my growth and true long-term success in the business.

So for the past five years I’ve been working to grow my book of business, and my father and I have just begun to entertain the process of our business succession plan. I’m excited to move into the phase where I become fully acclimated to his client base while simultaneously employing a second-generation business model to reach their children and garner additional referrals.

As his successor, if I can’t understand and relate to his clients, then our plan could easily fall apart in the first few years, or worse—never even get off the ground. A number of other factors could also cause hiccups in the transition.

For any millennial adviser under the wing of a parent, family member, or mentor, the following are some important points of advice for being the succession plan.

Admire and Absorb, but also Initiate and Communicate

The opportunity to shadow my father, who has been in the business more than 35 years, has been invaluable to my growth.

Since I started, I have been sitting in on his meetings to take notes. This not only allowed me to meet and become acquainted with his clients and their needs, but it helped me learn by observing my father’s actions and interactions. Even being a fly on the wall in this way is invaluable for young advisers. You may not be speaking or contributing much in the beginning, but you’ll be viewed as a friendly and familiar face to potential future clients.

I’ve been shadowing my father for years now, but I’ve also found it important to take initiative in adapting my own prospecting tactics to the practice. For instance, I’ve helped my father understand how we can leverage each other. If one of his clients speaks about their children in a meeting and how they may be in need of consultation from a financial planner, I will reach out to them directly the very next day.

Whether through practice management, marketing, or technology, there are many ways young advisers can add value to a mentor’s practice.

Seek Outside Knowledge

Though my father has been my mentor and sounding board in these early years of my career, he also helped me realize the importance of learning from others.

Before I aligned with Lincoln Financial Advisors as a registered representative, I went to work in their planning department based in Cleveland. This experience outside of my father’s practice helped me garner technical and background knowledge of the industry. I would implore any young adviser to seek similar outside experience.

I’ve also become heavily involved with Lincoln’s Gen2 program, which has become a great way to meet and interact with other young advisers. We had monthly calls during which we’d bounce ideas off one another, and discuss problems or roadblocks we came across in a way that helped us learn through each other’s experiences. Through the program, I was also given a coach who was a wonderful resource—in addition to my father—for questions I had while learning and navigating the business. FPA’s NexGen community, which provides planners age 36 and under a chance to explore common issues, is another way for young professionals to connect. And FPA’s MentorMatch program helps connect mentors and mentees.

Having access to this sharing environment and resources outside of one’s practice can help young advisers work through the challenges they face, and also expose them to new ideas that can be brought into their practice to help build efficiencies or generate new business.

Be Yourself, Especially Around Clients

Just because I am following in my father’s footsteps doesn’t mean I’m doing everything his way. The goal is to find your own style of working with clients that is effective for you and for them— not to become a carbon copy of your mentor.

For instance, my father will frequently meet with clients in his office or their office, so I will be sure to do the same if that is what the client is used to or prefers. However, when I’m meeting with new or younger clients, I often meet them at a coffee shop or at their home. This is sometimes just a matter of convenience for the client, particularly if they have young children or they work from home, or it may just help them feel more relaxed and comfortable if they’re unfamiliar with what it’s like to speak with a financial adviser.

All advisers must work to adapt to the changing times and evolving nature of this business. Young advisers, in particular, should take this in stride.

Find the Right Fit for You

For those who are ready to work hard, learn quickly and roll with the punches, being in the financial planning profession is a great opportunity for young people.

With so many advisers planning to retire, there are a limited number of successors qualified to take over their books of business. However, I would implore young advisers to realize that not every book is the right fit for every adviser.

To make sure you’re working toward acquiring a book that’s the best fit, young advisers must do their due diligence. Meeting with clients is just the tip of the iceberg—it’s important to realize that the succession plan is most effective when it is a multi-year process.

No matter how much time or effort you’ve put in with one adviser or one book, if it’s not the right fit, acknowledge that and move on. Forcing things to work won’t be good for the adviser, nor that adviser’s clients.

Mentorship and succession planning are imperative to our industry. For advisers building succession plans, know that there are worthy candidates who, if you take the time to mentor and teach them about your clients and your specific business, can provide a smooth transition when it comes time to hang your hat.

For those advisers who are the succession plan, it’s up to you to be the adviser that your mentor trusts to continue their life’s work. To do so, keep these points in mind and seek a community to learn from, to commiserate with, and to ultimately help you grow in the financial planning profession. 

Kelly Kennedy, CRPC®, is a registered representative with Lincoln Financial Advisors Corp. based in Sewickley, Pennsylvania.​​

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Succession Planning