hands passing the baton, business and sports, business succession

“Coach’s Forum” is a place in which you can ask your questions, tell your stories or give your opinions on any aspect of practice management. For each column, George selects the most interesting and relevant comments from readers and offers his advice. Our objective is to build a community of people with a common interest in making their financial advisory practices as effective as possible.

Advisor says: I heard you speak at our dealer firm’s professional development day recently. You talked about the excuses financial advisors give for not having a formal succession plan. You described them as the “terrible toos”: “I’m too busy”; “I’m too young”; “I’m too important to my business”; and so on.

The one excuse that struck me as most relevant was “To do what?” I am approaching the age when I know I should be arranging for my transition out of my business. However, I have no idea what I want to do in retirement. I admit to being a little more than frightened that I will tire of golf, travel and the grandkids pretty quickly. And then what? How would I spend my time? What do other advisors retire to?

Coach says: Thanks for admitting your fears. Acknowledging any problem is the first step in solving it.

As you also heard me say at your meeting, there are two dimensions to the decision to give up the business you probably have spent most of your life building. The first is financial. As you didn’t mention any concern about affording the retirement lifestyle you want, I’m going to assume that between your personal assets and what you hope to receive from the eventual sale of your business, you will be comfortable financially.

That brings us to the second dimension: the emotional aspect. This often is far more difficult to deal with. Begin by asking yourself the following questions:

– Will I be OK with someone else working with my clients?

– Will I miss the “action” of the markets, business, etc.?

– Will I miss the people: my clients, my staff and my associates?

– Will I miss the perks and the recognition?

– What will I do when I don’t have to get up and go to the office every morning?

I don’t want to be overly dramatic, but, in many ways, these questions lead to other, almost existential questions: “If I am defined by my business and I no longer have my business, who am I and what is my purpose in life?”

I subscribe to the theory of management guru Peter Drucker: the best way to predict the future is to create it. From the perspective of a financial advisor, that means having a vision for your transition to retirement – just as you had a vision for growing your business to its current state of success.

Perhaps the best way to illustrate this point is to describe a couple of coaching situations in which my colleagues and I are currently involved that represent different situations, but lead to the same objective:


Mary has built a successful business in a large metropolitan area during her 25-year career. She operates as a sole practitioner with two support staff. Mary’s personality, process and investment style have made her clients extremely loyal and the source of regular referrals.

If Mary continues to do what she’s doing, her business still will flourish. However, she recognizes that age is taking its toll on her energy, enthusiasm and willingness to keep up with changes in the investment industry.

We determined that Mary’s best course of action was to find a good successor – someone Mary can mentor over the next three to five years as she eases into retirement.

We set out a list of qualifications for a successor candidate, including age, credentials and years in the business, along with a need to adhere to Mary’s process, investment philosophy and client-service approach. We knew we probably wouldn’t find the perfect candidate who met all criteria, but we hoped that given the large network of advisors within Mary’s dealer, several potential successors would emerge.

But after careful consideration of some of Mary’s colleagues and several conversations with a few, we concluded there were no suitable successors among her associates.

About that time, Mary asked me about my own retirement plans and I gave my standard reply: “I define retirement as doing what I want, when I want, with people I like – so, in that sense, I am already retired.” That statement obviously got Mary thinking because the next time I was in her office, she showed me a piece of paper with my words written on it.

“I have decided to redefine retirement the same way you did,” Mary said. “I don’t really want to leave my business. I want more time for leisure, travel and to focus my work on the clients I enjoy most. I don’t want a successor to take over my business in a few years; I want a partner to help me grow it for as long as I am able to work at it.”

With the focus now on partnership rather than succession, we rewrote our list of qualifications and reviewed Mary’s initial candidates, among whom we identified two associates who met the revised criteria. Discussions are underway with both and we anticipate reaching a partnership deal with one, possibly both, soon.


Tom’s practice is quite different from Mary’s. During his 30 years in the business, he has created a substantial enterprise with four advisors and a staff of 10. Through Tom’s charitable work and extensive networking, his brand is very strong in the mid-sized community in which he’s based. His firm has many second- and third-generation clients.

Tom recognized the need for a succession plan several years ago. Consequently, he has been grooming one of the other advisors, who is well qualified, to take over in leading the business when Tom retires.

Tom wants to retire within two or three years, but he is finding letting go of the day-to-day operations difficult. He describes himself as a “hands-on manager.” Tom’s associates and staff, however, label him a “micromanager.” Tom also is the firm’s leading producer and he fiercely protects his relationships with many of the firm’s top clients. He worries that when he leaves, many of those clients will leave, too.

When I asked Tom what he wanted his retirement to look like, his response was “Freedom of choice in how I spend my time.” Further digging revealed that meant more vacation, as well as the ability to take a spur-of-the-moment golf trip with his buddies or a surprise weekend of Broadway shows in New York with his wife. The challenge, of course, was that with Tom’s heavy client commitments and his need to feel involved in everything going on in his business, he did not feel he could be spontaneous.

To free Tom from his sense of obligation, we created a new vision for the firm that describes a revised business model, objectives and culture. Tom took on the title of CEO, with responsibility for strategy and being the firm’s community ambassador. We elevated Tom’s successor to “president” and assigned him all but Tom’s top 50 clients. We hired an exceptional general manager to oversee all operations and reorganized the staff into more efficient, functional teams, which also created better opportunities for career advancement.

Knowing that Tom’s business could get along without his direct involvement and he has only 50 clients to deal with, Tom now looks forward to his transition out of the business with confidence.


Both situations called for a new vision. So, that’s my advice. Paint yourself a mental picture of what you want your life to look like in retirement: what you will be doing, when and with whom. Then, engineer your business to lead you to that goal.

George Hartman is CEO of Market Logics Inc. in Toronto. Send questions and comments regarding this column to george@marketlogics.ca. George’s practice-management videos can be viewed on www.investmentexecutive.com.