We’ve all seen it – the advisor who is about 10 years from retirement, starting to think about finding a potential successor to take over his business. Maybe it starts with a little casual networking within his local community of associations. When that doesn’t pan out, he looks for potential successors in the other firm he just bought (after all, he liked the advisor enough to go through a long acquisition process). But for some reason, he just doesn’t seem like a fit.
Slowly but surely, that 10-year time horizon dwindles down to 5. So now he starts to get serious about wanting to find a young new hire, someone who seems driven and hungry like he was, back when he first started. And there lies the issue, says Amy Kizer, Managing Partner with TalentLink Solutions, who has seen this many times over in her long career recruiting and placing talent in the financial services industry.
So while I know it’s Valentine’s Day, here’s a little tough love for the advisors out there looking for that perfect match.
Stop looking for someone just like you
Too often, you go looking for someone who’s just like you, with that same Type A personality and assertive nature that you feel enabled you to build the business you have today. Amy explains that advisors who have been in the business for 20+ years often forget what it was like when they started. They were essentially the creators of this profession, breaking the mold and leading the charge in defining what it meant to be a financial advisor. Advisors naturally evolved from their business development roles as brokers or insurance sales reps, into this new role.
The world is different now. You should be looking for a suitable business-owner (not just a sales rep) to take over. Having that same hunger and competitive spirit that’s commonly associated with sales is, of course, important – especially if you’re looking for that someone who will continue to drive revenue and grow your business over time. However, it’s important to acknowledge that financial planning is a real profession now. And as industry players, such as the robo-advisors, attempt to commoditize investment advice, there will be much more of a demand for true planners. You want to set your firm up for up for long-term success by hiring someone who is ambitious and driven, but also planning-focused and adept at developing relationships with clients.
Amy explains, “There’s also added risk when hiring advisors who are purely just the sales type, because they’re much more likely to leave to start their own firm. And guess what? They’ll probably take your clients with them too.”
In many ways, finding a successor with the right qualities to carry on your business requires a much more diligent search, because you’re looking for that right balance. Many advisors look at those candidates coming out of CFP programs and para-planner roles, and are concerned that they’re too analytical. Amy’s firm has actually seen better succession planning success rates by placing the young “servicing advisor” types with existing firms. The key is just finding that planner who also contains that entrepreneurial drive.
Change your mindset and commit already.
Once you’ve found that advisor who you think might be a potential match as a successor, you need to adjust your mindset and expectations. Amy often sees the struggle that advisors go through as business-owners, because they’re not yet ready to give up control. Succession is something tucked away in the back of their minds, but too often, the advisor keeps talking about retiring someday – and that “someday” keeps getting pushed back, year-after-year, without any substantial discussions to demonstrate that there’s a real plan and timeline in place. This creates a high risk that your successor will leave.
Amy strongly believes that advisors need to commit by having succession planning discussions early on with their potential successors. This next generation of advisors is of a different mentality and background than yours. They follow a different career path. Show that you’re serious about them taking over. Acknowledge that they’re going to come in and run things differently than you have. Have those open and honest discussions now, before it’s too late. After all, they cannot become that business owner you want them to be, unless you start to treat them like a true business owner.
Time is ticking
Don’t let time continue to tick away – this is far too important. Amy said it well: “If you care about your clients the way you say you do, then you have a responsibility to find the right successor to ensure they’re taken care of. So take a moment to self-reflect. Could YOU be the reason why you haven’t yet found that perfect match?