In a piece for FutureVault, Kristian Borghesan covers some important items that financial advisors need to consider for succession planning. This type of thinking is increasingly important given the boom of M&A in the space in addition to the aging of advisors in the industry.

Advisors want to ensure a smooth transition in their business to the next generation of advisors while ensuring that client satisfaction is not sacrificed. Additionally, both parties need to be aware of regulatory requirements as well as potential impacts on other employees at the firm.

The goal of succession planning is to ensure continuity of the business, retain clients, preserve the value of the practice, and transfer skills and expertise. Advisors and acquirers have a variety of options to choose from when it comes to structuring the transaction. Increasingly, many advisors are choosing to stay on as employees in a limited capacity to ensure a smooth transition. 

So much of the value of a financial advisor practice is due to the clients. Therefore, there needs to be a plan and transition period to ensure that relationships are successfully transferred to the new team. Some recommendations include joint meetings and a slow transition of responsibilities while maintaining active communication with clients during the transition process. 

Finsum: Succession planning is essential for advisors to ensure a smooth transition of their business and maximizing the value of their firm. Here are some important considerations.