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7 Tips for Effective Succession Planning in 2018

Terry Mullen
Jan 2, 2018

How your financial services firm plans for the future will have a profound impact on the long-term profitability of your business. It's not enough to meet the financial needs of your current customers and business partners; you must prepare for the future and ensure you have strategic growth plans in place.

One crucial component of effective future planning is to develop a detailed succession plan. Wealth management firms who fail to create a defined succession plan risk losing customers (and personnel) to savvier competitors. If you want assistance developing a succession plan in 2018, keep the following seven tips in mind.

  1. Succession planning is a core component of building a stable, healthy financial services business. You can have the best staff in the industry and a wealth of knowledge on financial products, but if your firm isn't prepared for the eventual retirement of senior officials, you could be left on shaky ground should long-term members of your team retire or move onto other business ventures. By understanding the importance of future planning, you can develop a mindset within your team that you're constantly focused on strategic growth for your company.
  2. Just as creating a succession plan is important, so too is sharing information between all relevant parties. When all involved parties are made aware of a firm's succession plan, there are no surprises when the actual transition takes place. Ensure all team members understand their role in company transitions and any future internal company changes will be seamless.
  3. Retirement isn't the only reason to develop a succession plan. Technological shifts and industry trends can cause shifts in an agency's internal makeup. Some senior team members may choose to take on an advisory role, while others might want to transition into new positions made available due to upgraded financial services technology software or shifts in company product offerings.
  4. Succession planning shouldn't be a surprise document or plan-of-action. Succession planning should be part of your overall management structure. From the day you hire a new adviser to each promotion you offer team members, understanding how each person's role relates to your overall succession plan is crucial.
  5. Building strong leaders within your team is critical for effective succession planning. You don't want your business to get to a growth point, only to realize you don't have associates in place to fill crucial roles. Even when you are hiring new associates for your firm, be aware of their leadership potential should you ever want to include them in your succession plans.
  6. The survival of your financial services firm can depend on the quality of your succession plan. Fail to develop a strong team and create an effective plan and you doom your company to a slow decline into obscurity. Clients will only trust your brand for as long as you can convince them of the caliber of your team. Leadership and industry knowledge are core characteristics customers will look for from your associates.
  7. If your financial services firm has a board of directors, succession planning should be part of how your BoD is structured. Not only do you want your internal organization ready for eventual staff transitions, you want your Board of Directors ready for the retirement/removal of board members.

Apply these tips to the succession plan for your financial advisement firm and you'll go a long way towards future-proofing your organization this year. Review your succession plan on an ongoing basis, and your business will be ready for whatever the future may bring.

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