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Business Development Plan your succession now

Plan your succession now

If you want your practice to outlive you then build a succession plan today, advises a whitepaper by ADP Retirement Services.
Team Cafemutual Nov 23, 2017

Advisors make their clients understand the importance of careful planning for their future goals. Ironically, most advisors have not addressed a critically important question to them: what will happen to their business when they retire or die?

A whitepaper by ADP Retirement Services lists out the importance of a succession plan for advisors. “It is clear that succession planning is important in many ways – for the sake of continuity of care for clients of course and for providing funds for the advisor’s retirement,” says the whitepaper.

Funding retirement

Clearly, assets under advisory (AUA) is the biggest asset an advisor has. When an advisor retires, he should be able to earn from the assets he has built. According to the whitepaper, with proper succession planning, an advisor can ensure that he reaps the benefits of his hard work.  “Working on a succession plan well ahead of the desired retirement date allows for more planning options and can add significantly to the advisor’s total compensation,” the whitepaper says.

Client continuity

Another approach to the topic of succession planning is to think in terms of business continuity. What would happen to your clients, employees and family in an unfortunate event of some sort?

Business interruptions can take many forms and a succession plan helps advisors ensure that advisors can help their clients even after they retire. “Advisors must have an up-to-date plan describing the steps that a firm will take to protect their accounts in case normal service is interrupted. Investors are exposed if their advisors don’t have contingency plans in place,” says the whitepaper.

It is clear that succession planning is the ultimate worth of an advisory practice.


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1 Comment
Pankaj Kumar Gera · 9 months ago
The article must also guide way thru which Advisor can do succession planning. Most common succession plan is nomination. For nomination to be effective, nominee should have ARN. Alternate way is transferring Distribution business to Pvt Ltd. Co. This is costly (in terms of setting up cost etc.) but is most effective. There will be challenges in transferring AUM to Pvt Ltd., but is worth the effort.
Pankaj Gera, CFA, CFP
Gera Wealth Creators
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