We’ve all heard the age-old adage, “Time flies.”
It’s a common phrase in the human vocabulary, and it’s especially prevalent with financial services professionals. Whether you’re a sole practitioner or lead a team of multiple planners, time spent on the business often escapes even the finest time managers.
From reviewing markets and product options to daily client management and planning needs, time escapes the best of us. It’s as simple as that.
Planning for Retirement
So, what’s your number?
If you were asked what your retirement plan is, how would you respond? Most often, the top three financial professional answers I hear are:
- “I haven’t thought about it.”
- “At least 10 years out.”
Spoiler alert: all those answers aren’t sufficient. That’s because it’s necessary to discuss and plan a successful succession plan. A delayed approach to planning for business succession can have multiple impacts that’ll mostly impair the future value and structure of the business.
Financial professionals that have taken the proactive approach to planning for the eventual transfer of their business assets are already seeing the return on their investment. Here are five things established financial professionals are doing now to secure the future of their business.
1. Creating and Implementing Strategic Growth Plans
The key takeaway is implementation. Many advisors work diligently to create strategic initiatives for their businesses, but all too often fail to execute them. Alone or with your key team members, diligently create the growth plans for the next one, three, and five years.
When complete, decide who will be accountable for each specific item. Be sure to review your initiatives regularly to quantify progress.
2. Systematize All Business Aspects
There’s enormous value in having sensible internal processes in your firm. All internal workflows should be structured to ensure an easy transition to future team members and your firm’s successor. Start with macro processes and then go micro; all the way down to how your clients expect the phones to be answered. Map all these methods using your preferred technology for future review, alteration, training, and transfer.
3. Implement Continuity or Shareholder Planning
In all likelihood, your future successor will come from within your business. Should a triggering event such as death or serious disability occur, a proper plan will allow your business to continue, and key employees will be rewarded appropriately.
4. Next Generation Mentoring
Financial professionals are locked down each day with tactical needs, with the brunt of it landing on client procurement and retention. Therefore, it’s vital to mentor the next generation of financial professionals to create your future succession. Spend the time to create and time-manage an effective mentoring model.
5. New Revenue Alternatives
Financial professionals face new scrutiny and opportunity with the ever-changing financial services landscape. Successful planners look to new revenue opportunities such as adding a new line of business or charging monthly retainer fees to clients who don’t have the assets to invest. There are now numerous chances to increase earnings before interest, taxes, depreciation, and amortization (EBITDA) without significantly modifying your business model.
Importance of Succession Planning
In summation, maintaining a steady income and a stable balance sheet can use almost all of your time—even if you’re close to retirement. Even if it can seem like a distant star far off in the galaxy.
However, making sure your firm has an efficient succession plan in place is advantageous—and perhaps necessary—for your business to endure.