The Dangers of Avoiding Succession Planning

Sometimes it’s hard to think about your own retirement when you are helping so many of your clients plan for their own. It’s one of the dangerous traps that many independent financial advisors fall into during their later years of practice. Unfortunately, avoiding your retirement plans can have a negative impact on your business as well as your clients. Putting a proven, solid succession plan in place isn’t just important to your retirement, it’s important to the health of your business.

No Succession Plan? You Can Look Forward To…

A lack of employee engagement.

Employees want to know that their careers are going somewhere. Having a goal of a raise or a promotion can keep them engaged and focused at work. If they aren’t sure where their career is going or that they are being recognized, they are much more likely to tune out. A succession plan can help everyone know what opportunities are available for them now and in the future and forces a discussion about where they want to go.

Top employees leaving for new opportunities.

If your top employees think there is no room for them to move up, they are much more likely to jump ship and head over to a larger company. Many of the large financial advisement firms have clearly structured succession plans in place, so employees always have an opportunities to move up to bigger and better things. That’s an attractive prospect to someone who is good at their job but at peaked in your smaller company.

Increasing business costs.

When people quit, you have to pay to find a new person. Then you need to spend time training them. It’s a long, exhausting process but it’s also an expensive one. The more turnover you have within your company, the higher your costs are going to be. Increasing business costs are a detriment to the sale of your company and the prospects of your own successful retirement.

Scrambling to find the right people.

When you lose good people, you have to find someone new. When you are searching for new employees in a panic, you can end up with someone who is less-than-best. This has a negative impact on overall morale in your business and can even erode client trust. There is a lack of qualified and capable financial advisors in the market for jobs, and you don’t want to be sifting through a pile of resumes from unqualified candidates when you desperately need someone to fill the job.

Losing clients to big companies.

Your clients are aware that you are likely to retire before they do. If they know that and don’t see a plan in place to handle that transition, they may make the transition happen themselves and take their business to a larger company. Thanks to the succession planning of large companies, clients know that there will always be someone there who is capable of handling their portfolio. If they look at your company and see a never ending parade of advisors walking out the door, they aren’t going to be confident about your abilities to make their financial portfolio a priority.

The bottom line is this: you need a succession plan for your business. But where do you begin? How do you make that plan? How long should it take? And what’s involved in a successful transition to retirement? If you want to avoid the pitfalls of not having a succession plan in place, get in touch with advisorRETIRE™ today to get started.