Financial Practice succession – Perception and Reality.

I recently attended a national conference for one of the larger Independent BD’s. The number of attendees was impressive as was the lineup of speakers and opportunities to learn. An event well worth the time and energy it takes these days to tolerate air travel.

I had been told long ago by a boss of the day “Allen the reality of a situation is not relevant unless those who are affected by it, understand it. If the perception of the group is that they are unaffected, then their Perception becomes Reality.”

And so my favorite phrase is “Perception is Reality”. At the meeting the interesting take away from the sidebar conversations is the many and varied perceptions people have with regards to their businesses succession prospects. The one undeniable reality is that attendees were age biased and there was no shortage of grey hair.

As a company we have a vested interest in the group as a whole for a simple reason, a significant number of the advisors we meet will retire in the coming decade, either by choice or by demise. We wish to serve both the younger generation of planners who desire growth as well the retiring advisors who “should” be planning an exit. It only makes sense to establish a conduit that supports the desires of the Next Generation while meeting the needs of the Now Generation who are in the twilight of their careers.

My takeaway from the meeting was that the industry is vibrant and continues to walk a disciplined line with regards codes of conduct and keeping its advisors educated. But the nitty gritty of what the industry is going to do for assistance to the succession/acquisition aspirations of the advisors who make up the majority by number, if not by AUM, is an issue. Some BDs are trying to answer the question of what you need to do. This is good in that it creates the basis for a dialogue.  The issue of “How” you execute the process is complex, and the concern over “Who” you select as buyer/seller is more complex.  In the coming months we will roll out a program which aims at making the process simple and mutually beneficial for the community as a whole.  Watch this space.

If I follow my own mantra and believe that my perception is actually a reflection of reality – Financial Planning is maturing as an industry and part of that maturation process is that smaller firms need to prove their institutional/operations credibility, independent of the personal performance of the owner.

Then the foundation for a rational process for succession is simplified and in large part standardized.  A solid foundation for succession in a practice allows fulfillment of obligations to the firm’s clients well beyond the day the founder retires. At the same time it creates an executable template that we can all understand.