Financial advisors intuitively grasp the importance of planning to help their clients reach their financial goals. As business owners, advisors need to apply the same principles with succession planning to maximize the value of their practice. A succession plan should provide a contingency plan for unforeseen circumstances in addition to detailing how the practice will transition in the future. Here are some common mistakes to avoid.

The first mistake is to not have a proper understanding of the value of your practice. This includes financial as well as other considerations such as the impact on your clients, the organizational structure of your firm, and how the firm will function without you.

Another mistake is to be unclear clear about your needs and wants in order to determine the ideal successor. With this selection, it’s important to find alignment in terms of investment philosophy, location, mission statement, and how they will continue to serve your clients effectively.  

Many advisors also err by not sharing their succession plan with key stakeholders like employees, clients, family members, etc. Rather, the succession plan and any iterations should be shared with everyone to ensure that there is no lack of clarity. It can also help with client retention and recruitment. 

Finsum: Succession planning is quite important for financial advisors for several reasons. Here are some mistakes to avoid.