Three Mistakes when Planning for Succession

Pershing Advisor Solutions recently published a report that revealed 70% of advisory firms with $5 million or more in revenues lack a succession plan or do not have an adequate one.  Advising firms need to develop a plan and they should keep three things in mind to avoid when planning. Three common mistakes include:

1. Building the wrong Bench: Don’t look for people who mimic the current leadership. The market is changing and client’s needs change with it. When recruiting successors, try to think outside of the box and consider what you want the future of the firm to look like.

2. Turning succession into a horse race: Instead of announcing that everyone in your company has a chance at succession, emphasize how valuable the successors will be. By emphasizing the value and the need for a development plan, the focus shifts to building a great team instead of racing to become individual successors.

3. Acting out of fear: Instead of making rushed decisions, start planning early and think of how a lack of strategy would effect your loved ones, your employees, and your investors.

Jerry Gleeson, The Three Deadly Mistakes of Succession Planning, RegisteredRep Magazine, Jan. 20, 2012.

Special thanks to Jim Hillhouse (Professional Legal Marketing  (PLM, Inc.)) for bringing this article to my attention.