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PASSING THE TORCH – PART II Your Successful Succession Strategy  

Advisors specialize in helping clients prepare for life events such as retirement, and counsel them on the prerequisites for reaching their goals.  Having said that, why don’t the 42% of advisors who are within two years of transitioning, have their own financial plan in place?*  Align your succession plan with the long-term strategy of your firm, and , it will become an integral part of your business practice.  Part I of Succession Planning,  https://aeschlapia.wordpress.com/2012/09/17/passing-the-torch-succession-planning-part-i/, briefly outlined the succession strategy; below is an in depth review of the key factors.

EVALUATE THE PRACTICE, DEFINE YOUR GOALS, DESIGN A PLAN

There are multiple ways of passing your practice to others.  The ideal time to coordinate your transition is 10 years; strategy options will decline the longer you wait to implement your succession plan.  There will most likely be changes and adjustments along the way regardless of your time frame and pre-planning; stay flexible in the execution of your plan.

  • Start early as you see your business value increase
  • Use a SWOT analysis to define the structure and goals of your practice by outlining the strengths, weaknesses, opportunities and threats
  • Use Ironstone’s Fundamental 4™ to shape your business, ideas and solutions
  • Identify the reputation and legacy you want your practice to establish
  • Identify key roles that require continuity and are essential to your firm’s success
  • Establish a short-term/emergency and long-term succession time-line; initial planning to closing the sale
  • Outline 10, 5, and 1-year milestones to achieve, as well as potential milestones following the transition

You will also want to identify the nature of the sale

Internal

  • Sell your ownership to one or more partner(s) of the practice
  • Sell your ownership to a junior partner who was hired specifically for succession
  • Transfer your practice to a relative

External

  • Sell your practice to a strategic partner in exchange for ownership in the larger firm
  • Sell your practice to a wealth management firm e.g. bank

PREPARE THE PRACTICE FOR TRANSFER

Include your CPA and attorney in this process to council your decisions and efforts as you outline the formalities of the transfer.  Build a succession plan that incorporates events that occur in your practice.  Some areas of focus include:

  • Determine the value of your practice and cultivate these drivers of valuation:  Adequate time for succession, client retention, reliable earnings, normalized earnings and AUM/REV
  • Assess your client segmentations
  • Restructure your organization design if necessary
  • Review and prepare formal documents such as financial statements, business plan, marketing plan, etc.
  • Upgrade your technology platform
  • Hire potential successors or search for external buyers
  • Finalize legalities – non-disclosure/non-solicit agreements, negotiations, possible discounts on sales, corporate structure
  • Create equity participation plans for employees
  • Prepare for mergers, acquisitions, financing
  • Launch new market penetration initiatives
  • Organize transfer of assets

PREPARE YOURSELF FOR TRANSFER

In order to transition from your practice you need to solidify a sense of purpose beyond the transition.  This will eliminate your fears and will sustain your emotional commitment to the transition.

  • Define your role in the practice after the transition– e.g. short-term advisor role, ambassador role that provides emotional connections to long-term relationships
  • Define your personal goals, beyond the practice, by developing interests and securing financial resources independent of your business

PREPARE YOUR TEAM FOR TRANSFER

Communicate the changes to the entire team, as well as memorialize processes and systems that are repeatable and no longer require your supervision  This will create a seamless transition and increase the value of your practice.

  • Delegate your responsibilities to your entire team to reduce the burden on one or two people
  • Collaborate with your team and incorporate their contributions to secure their “buy-in” of the changes
  • Create and document processes, policies, procedures and systems to create confidence for your clients and future buyer(s)
  • Define and refine team roles, responsibilities and job descriptions

CHOOSE YOUR SUCCESSOR(S)

A common misconception is that a succession plan involves only finding a successor for the business owner; however, there is often more than just one role that requires continuity and is essential to the success and growth of your practice.  There is also much debate surrounding the topic of whether you should inform team members if they are in the talent pool for advancement to leadership positions.

In Ironstone’s research, we have found the answer to be quite clear…….Tell Them! This will not only motivate team members to aspire to be a part of the talent pool, it will safeguard you from prematurely losing your top performers to the competition.

  • Determine criteria for welcoming new leadership – e.g. leadership/management ability, cultural fit, shared firm vision
  • Assess personality types and preferences to understand your workforce potential and identify your high-potential employees
  • Be open to having multiple successors fill the shoes of a key role – e.g. changing from a single advisor to a board or committee

DEVELOPMENT, REFINEMENT AND PLANNING

The research is shocking – only 26% of firms have processes in place to develop internal talent.** Defining and designing career paths within your business are essential to combat unnecessary employee turnover.  This process involves mentoring and coaching to prepare high-potential team members for advancement.

  • Continuous evaluation of your current talent will help you recruit and promote from within
  • Develop pools of talent who are at various stages of readiness for promotion or new assignments
  • Support learning through relevant work experiences and daily assignments
  • Identify and develop pools of talent for all critical areas in your organization, not just leadership

PREPARE YOUR CLIENTS FOR TRANSFER

Preparing your clients for the transfer is critical.  You must create confidence for your clients with the new advisor(s) and that they believe their needs and interests are in good hands.  The key is to make your absence a farewell rather than a loss to the business to ensure clients will stay with you through your transition.

  • Develop deep relationships and a communication plan that reaches clients, stakeholders and business partners
  • Inform clients of the succession plan, introduce them to the successors, transfer the relationship
  • Communicate any changes in client account structure, point person, etc.
  • Encourage and ensure that all interaction gravitates to the new leadership before your transition is complete.

IN CONCLUSION

Your successors are at the heart of your achievement!  Groom your practice and invest in successors through realistic developmental expectations of high performing leaders.  At each interval of your plan and your transition, stay realistic and take time to make necessary modifications.  A refined process will secure the chances of exiting with a prosperous outcome for all parties involved.

Strategic business planning includes succession planning.  Creating value for your firm that you can later sell will require that you look at your core values, vision and mission.

Ironstone will assist you with each stage of succession planning and provide tactical approaches to strategic planning, operational and human capital fundamentals that are vital components of successful succession planning.

*2012 AdvisorOne, **2012 IN Adviser Solutions Succession Planning Study

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Existing Client Workflow – Don’t Just Manage Your Client Experience, Enhance it!

You Must Keep One Thing In The Front Of Your Mind,

“Relationship Building Is A Process”

In our blog about New Client Workflows (https://aeschlapia.wordpress.com/2012/04/24/workflows-how-they-enable-execution-of-your-business-strategy/), we explore the details that you need to consider while building the strategies to acquire and interact with new clients.  Existing clients need just as much time and attention in order to remain clients.

In general, a client experience is the knowledge and understanding that clients gain as a result of their interaction with your employees, brand, web site, customer applications, office space, point of sale, or any other touch points.  The following factors are the essential ways in which you have control over how good or how great your client experience is:

  1. Define Your Client Experience: This is a series of decisions about which services to automate, which to drive manually, when to schedule reviews, when to prompt client interactions or service reminders, and what information to store.  Establish processes unique to each channel since an in-person experience will differ considerably from an online experience.
  2. Collect Client Details: The ability to effectively extract relevant details about clients is one of the most potent advantages one can have during the sales process.  Our recent blog about Client Management Databases (https://aeschlapia.wordpress.com/2012/05/08/client-management-databases-use-them-to-your-full-advantage/) describes what information to capture in your CRM.  However, consider going beyond the norm.  Collect information that may be considered trivial or irrelevant (for instance, travel preferences) and use your CRM to process this data and recognize patterns in order to help develop personalized offers.  When meeting with clients and prospects, learn as much as possible through a truly meaningful interview by engaging in conversation that will not only strengthen and enhance your relationship, but allow you to find out how your practice can improve their experience.  Some topics to ask questions about, are:

 

  • Family and Relationships – issues with family members that may impact planning?
  • Lifestyle and Hobbies – What are you most passionate about?  In what ways do you participate?
  • Value and Concern -How do you define quality of life?
  • Career – Are you currently working?  How long do you plan to work?
  • Business Ownership – Describe how selling or retiring from your business will affect you.
  • Assets – What is your strategy for saving or setting aside money to invest?
  • Legacy – What causes/organizations/charities, etc. are you and your family passionate about?
  • Developing a Team – What are your best and worst experiences with an investment advisor or financial planner?
  • Service Expectations – What can our firm do in order to provide you with the ultimate client experience to gain your trust and loyalty?

 

  1. Narrow Your Client Focus: A well planned questionnaire to collect information will help you identify which target market your client/prospect should be cited in for future campaigns.  This will help you create your ideal customer profile and essentially your niche target market, as well as provide the structure you need to define your client segments and service matrix.
  2. Engage Your Team Members:  It is critical that all levels of the team are involved in this process in order to promote clarity and consistency.  Ask your team if they understand what is expected of them.  Review and refine all tasks in order to communicate transparent expectations that can be attained.  Beware of heavy restrictions and rules that might hinder the ability to create positive client outcomes.  Define specific innovation objectives and rewards for improving the customer experience. This will inspire an unrelenting commitment to exceeding client expectations.
  3. Engage Your Clients: Customer engagement materializes in a conversation that leads to a greater level of interest from both parties.  Be the voice of your client and ensure that you are addressing their emotional needs better than your competitor can.  Know your client’s alternatives to make sure you can deliver on the promise of being better.  This leads to the voluntary involvement of the client rather than a sale on the premise of desperation and lack of alternative options. Once you’ve engaged customers with personalized offers, it’s time to entice them.  This means the perfect combination of essential value, amenable feelings, and perfect timing.  Practice showing genuine interest through key points that you have learned, in order to show that you have a valued interest in your client beyond the transaction.  By adding a personal touch to your client conversations now and in the future, you are most likely to make your clients feel important and special.
  4. Measure Your Client Experience: The measurement stage is essential to any process.  It provides new insights on how to improve and provides empowerment as a result of the successes that are revealed. A good evaluation system is first and foremost regular.  It encourages internal feedback as well as elicits feedback from clients to ensure consistency.  It may even be beneficial to test a process with trusted clients before the official launch date.  Collect feedback through surveys, focus groups, visual tracking aids, and offer incentives for volunteering opinions.

Workflows ensure consistency and the delivery of promised value.  The practice can rest, assured that things aren’t falling through the cracks and there are no missed opportunities.  In essence, workflows aid in creating exceptional client experiences, which results in client retention and ultimately client referrals.  While clients can’t always tell you what will exceed their expectations, they notice it when it happens and they tell others about it.

Ironstone can assist you in developing the strategies and tactical questions to gain meaningful insights that will strengthen client relationships and assist you throughout the process.  By seizing control over the factors above, you will move from a buyer/seller relationship to sharing common interests with your clients and prospects.

Contact us for assistance in starting and improving your Existing Client Workflow.  We want to hear from you!   Share your best ideas here!

Follow us as we explore each of Ironstone’s Fundamental 4™!

  • Strategic Planning
  • Business Development
  • Operational Effectiveness
  • The Human Element

 

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