For WealthProfessional, Leo Almazora discusses best practices when it comes to succession planning. For one, advisors need to delineate between working in the business and on the business. Many are so wrapped up in helping their clients plan for the future and reach their financial goals that they don’t apply similar principles to the futures of their practice.

However, it’s increasingly accepted that succession planning is an integral part of serving your clients especially if you plan to retire before your clients. Therefore, advisors need to secure a worthy successor for their clients and it’s ‘the last best thing an advisor can do for their clients’.

According to Almazora, advisors should start planning for succession about 5 years before their retirement date. Although there are multiple ways to structure a takeover, some sort of soft transition is ideal, where the new advisor and old advisor both work together for a couple of years to ease the transition. These types of transitions typically result in less client attrition and more client satisfaction. 

In terms of finding the right successor, some considerations are shared values in terms of planning and investing and a similar temperament when it comes to clients. Another important factor is that the successor should be able to identify with the niche that is an advisor’s specialty. 

Finsum: Over the next decade, there is going to be a wave of retirement of financial advisors. WIth this in mind, advisors need to get serious about succession planning.