BDs Must Keep Empathy At The Forefront Of Advisor Succession Planning

It’s More Than A Transaction To Advisors, Who Care About Clients, Successors, Families And Moving Into Retirement Well
Mary Ford, Succession and Acquisition Specialist, Sigma Financial; Michele Bergeron, Practice Management Succession Acquisition Consultant, Axtella
Mary Ford, Succession and Acquisition Specialist, Sigma Financial; Michele Bergeron, Practice Management Succession Acquisition Consultant, Axtella

Developing a succession plan for a financial professional is a journey that involves both professional acumen and deep-seated human connections. Broker-dealers can play a pivotal role in designing a cohesive plan for the advisors they work with, but it is essential that the process is not categorized as transactional, and instead is rooted in empathy. Here’s what we know works.

Let The Financial Professional Guide The Conversation

Succession planning for financial professionals involves more than a pile of paperwork and identifying a successor – it’s about being an extension of the advisor’s family, offering a support system that acknowledges their emotional and professional needs. Advisors often hesitate to discuss retirement, but a sensitive approach, where they lead the conversation, allows for active listening and tailored responses to what is often an incredibly emotional and life-altering decision.

Retirement is an incredibly emotional and life-altering decision.

There is no one-size-fits-all solution for succession planning. We’ve come across financial professionals in varying life situations with differing perspectives on the process. Across all situations is the shared sentiment that they want to get it right, creating a seamless transition of their business. The broker-dealer’s role is to listen and provide support, allowing them to express their perspective, concerns, fears and anxieties freely.

Following an advisor’s lead may also involve bringing other family members into the process. We have spoken with advisors’ spouses who are relied upon for guidance on their firm’s future, and we’ve seen situations where the spouse has a close eye on the process and plays a considerable role in making decisions about the future of the practice.

Advisors are also concerned about what comes next. In some instances, an advisor knows it’s time to move into retirement but is not sure what their day-to-day will look like. Talk about their interests and hobbies and help them find solutions to ensure they remain active when they step away from their professional lives.

Understanding An Advisor’s Deep Connections With Clients

Advisors often view their clients as more than just clients, who in many cases are also family and friends. This deep connection means they don’t want to hand over their business to just anyone. Finding the right successor who shares their sentiment toward clients is crucial. Be sure to listen and act upon a founder’s hesitations and concerns, ensuring that the emotional value they place on their relationships with clients is respected and preserved.

A financial professional’s physical location may also come into play, especially for those who operate in remote locations. It’s not just about finding a successor with the right qualifications –it’s about finding someone who is willing to operate in the same geography. When the advisor-client relationship changes hands, the client often expects the same experience they previously enjoyed. A multi-decade span of in-person meetings simply cannot be replicated or replaced by virtual gatherings.

Cultivating The Next Generation Of Successors

Uncovering a successor within the existing practice is often impractical, but for advisors seeking to pass their business internally, options need to be available for training and talent development. To help founders and advisors find a next-gen leader for their firm, it is important to have a sponsored financial professional program that covers the costs of necessary exams, study materials, registration fees and affiliation fees for the first year. We have such a program and often see the children or grandchildren of current advisors utilize it.

Options need to be available for training and talent development for successors within the existing practice.

Succession planning is a delicate balance of professional expertise and genuine empathy. This method not only benefits the individuals directly involved but also sets a standard for the industry, highlighting the importance of a human-centric approach in financial advisory services.

Michele Bergeron is a Practice Management Succession Acquisition Consultant for Axtella, which supports the financial network of RIA Sigma Planning and broker-dealers Sigma Financial and Parkland Securities. Mary Ford is a Succession and Acquisition Specialist at Sigma Financial.

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