Why Succession Planning is More “Dating Game” Than “Married At First Sight”


Last month, Missy Pohlig wrote Still Looking for that Young Successor? Maybe It’s You, Not Them, where she discussed how today’s advisors shouldn’t try to hire some version of themselves, but rather a junior advisor who can mix both business management AND sales. Today, I’ll add this caution: Don’t get married right away; date first.

Is it still true that 50% of marriages end in divorce?

I’ve seen it happen all too often. An aging advisor (Senior) brings in younger planner (Junior) with some experience and a few clients to lighten the client load, diversify the firm and potentially become the succession plan. Senior immediately introduces Junior into all the client relationships and promotes the new hire as the heir apparent. Senior is proud of the hire and sits back, thinking that his/her work is done and expects Junior to figure it out (after all, no one really taught him/her). Junior gravitates to technology or investments and client service to his existing book (easier to demonstrate “results”). A few years later, both advisors are frustrated with the progress of the firm.


  • There are relatively no new assets from the Junior (where is the growth to pay for additional expenses of salary, etc.?)
  • With no formal training, Junior feels stagnant and wants to do more but has no direction
  • Junior is servicing and building strong relationships with existing clients (and their kids)
  • Lack of communication between Junior and Senior leads to office power struggles and job dissatisfaction

Junior leaves (or is terminated), and years are now wasted. Succession planning hits a dead end, the firm is no longer diversified and maybe even a few clients follow Junior out the door. Senior is back to square one.

Why succession planning is more “Dating Game” than “Married At First Sight” Click To Tweet

What if they dated first?

Typically, I see advisors who are so sure of their judgment (or possibly so desperate for that junior advisor) that they rush to hire the candidates as soon as they find them. Why not try to work together first before you hire or work for someone?

Here is an example: A few years ago, I was talking to an advisor in his late 60s. He had met a younger advisor whom he liked and shared a similar business style and values – and because he was in his early 40s, could potentially become his succession plan. They started discussions about merging and called to ask what their next steps should be. The more we talked, it occurred to me that they needed time to really get to know each other first. During this call and a few subsequent others, we came up with a plan to slowly integrate their businesses. The plan included:

  1. Signing non-disclosure documents and introducing each other not as a partner or successor, but as a formal continuity plan. Clients were thrilled that the continuity plan was in place on both sides.
  2. Starting a biweekly client review process, where each advisor brought a current case (existing or new) to a meeting to show how they viewed the planning process, how they would service certain clients and what recommendations they would provide. They used this time to educate each other on planning topics and techniques.
  3. Sharing a business dashboard (which included AUM, new clients, margins, etc.) to help understand each other’s financials.
  4. Beginning the process of merging their businesses after 1 year. They had formal business valuations done to understand what each was bringing to the table and took a proportional share of the combined business in ownership. More importantly, they created a formal “out plan” – what would happen if something went wrong in the partnership (to keep my analogy going, I called it a “pre-nup.”)
  5. Individually servicing their own book during the next year, but developing a service team that included the other advisor.
  6. Creating not only a timeline for the retirement of the senior advisor, but metrics that the combined firm needed to hit before the younger advisor was allowed to buy more equity in the combined firm.

Two years later, the senior advisor is slowing down, handing more clients to the junior advisor and working from his “southwestern office” in Arizona. The junior advisor is buying out the senior advisor a bit faster than anticipated, due to the strong growth they are experiencing. They have found an even more junior advisor (in her late 20s) that seems to be a fit for an additional continuity plan and potential merger down the road.

Plan for yourself, too

Successful partnerships rarely work on gut instinct. You have to have a plan in place. By focusing on an orderly progression, advisors won’t find themselves suck in a dead-end relationship. While the example may not work exactly for you, think of it is a guideline for a merger process. It will take more time than a shotgun wedding, but I think the results will be better, too.

Share Button
John Anderson

John Anderson

John Anderson is the creator and lead author of Practically Speaking blog and Managing Director of Practice Management Solutions for the SEI Advisor Network.

Learn More About John Anderson



Digital Advice Toolkit

Follow Us on Facebook

Recent Tweets