What are the keys to a successful succession plan? In a ThinkAdvisor article, Richard Dragotta, a branch manager at LPL, offers two. The first is basing your approach on the realization that a succession plan should be a process, not an event, says Dragotta. A successful transition reflects a carefully planned and executed process, while a hallmark of an unsuccessful one is a quick, event-driven decision followed by a rapid exit.
The second key to a successful succession plan: a focus on client retention. Says Dragotta, “In terms of making that succession planning apparent to your clients, the introductions, the subtleties and the discussions about that need to happen as rapport is built over many years.” One sign that a succession plan has been implemented correctly, he notes, is that advisors will have “slowly integrated a person and their role. They’ve sat on meetings and it’s almost a matter of fact. It’s not a stranger, it’s not someone they met six months ago.”
While some advisors want to get out quickly once the decision is made, others want to stay involved and withdraw from the business over a period of time. There are ways to monetize the business “so that you and your family or your beneficiaries [can benefit] without having to completely leave it,” he notes. These include ESOP programs or stock options.
