Succession by Design

6 Steps That Make Succession the Growth Engine of Your Business

Two practices of the same size can sell for wildly different numbers. One goes for one times trailing twelve or less. The other clears three or four times, sometimes more. The gap is not timing or luck. It comes down to five things that were either built into the business years earlier or were not: whether someone other than the founder holds the trusted advisor relationship, whether the processes are written down, what the book actually looks like under the hood, whether it still grows organically, and whether it keeps clients. By the time an advisor is ready to exit, those five are already decided.

Tony Parmenter and Matt Hicken have each spent roughly 25 years at Bill Good Marketing. Tony is Senior VP of Client Success and has walked many advisors through retirement, exit, and sale. Matt is Senior VP of Consulting, reviews the partnership and buy-sell agreements advisors bring him, and teaches Asset Accelerator. In this webinar they cover the two plans every practice needs and almost none have in writing: continuity for when you are unexpectedly out, and succession for when you are done.

Why your continuity plan probably isn't one:

Tony describes an advisor who had actually done the work. After an accident kept him out of the office for six months, everything continued without him. Statements went out, checks were issued, clients were served, and he came back mildly surprised to find the business had grown in his absence. Set that against a team where the senior advisor brought in a junior partner as his eventual successor, and the junior partner was the one who died. No plan existed for that direction, and it took years of extra work and stress to untangle. What most advisors call a continuity plan is really just the firm’s agreement that the estate gets paid and the accounts get reassigned. That is a payout. Continuity means your clients and your staff notice nothing different except who is on the phone.

Succession is separate. It is the documented, signed handoff of the practice when you are done. Both need to exist in writing, both need your team read in, and both need to cover every advisor on the team, not just the senior one. The session opens with a case where the junior partner was the one who died, and no plan existed for that.

Continuity and succession are two different plans

Continuity is for everyone on the team, including the junior advisor, and it has to be written, contracted, and understood by the staff. Succession is the separate, documented handoff of the practice when the lead advisor is finished. Tony and Matt also name the uncomfortable fact underneath both: every one of your clients already has a second advisor in mind, whether it is a daughter’s advisor or a brother-in-law’s. Your job during a transition is to make staying easier than leaving.

Choosing a successor, and what to pay them

Matt lays out the two routes. Mentorship means developing someone into the advisor your clients already trust, which produces the cleanest handoff but needs five years of runway. If you have less time, you are looking for an advisor whose experience, planning philosophy, and level of organization genuinely match yours, because clients feel a mismatch in the first review meeting. Either way you are hiring for six specific traits, and the one Tony and Matt say is most often missing in new advisors is active listening. Compensation moves in three stages: salary plus a bonus tied to measurable outcomes, then a percentage of the households they serve, then joint rep codes and a conversation about equity. Handing the practice to a son or daughter shortcuts none of this.

The five-year handoff

Years five through three are mentorship, building both competence and client rapport. Year two is transition, where the successor takes on reviews and new business. Year one is introductions, where clients hear from you directly who is taking over. The last three to six months are overlap, where you are a resource rather than the advisor. Tony and Matt close with a question from an attendee whose team has no rainmaker, and how to move into a CEO role without the day-to-day following you there.

Free tool from this session

Tony and Matt built the Advisor Continuity Plan Questionnaire to go with this webinar. It surfaces the parts of your practice that do not have answers yet, which are exactly the gaps you would need to close before an attorney could turn any of it into a binding agreement.

It’s free at bgmtips.com/succession

Want help building your continuity or succession plan? Talk to Stephanie Peterson at Bill Good Marketing about finding the right successor or getting your practice ready to hand off.