Knowledge and Insight > Plan for the Future

Charting Your Succession Course

David Grau Sr. | wealthmanagement.com, July 2014

Summary: I fly a lot in my work for FP Transitions—millions of miles, so far. I once asked a pilot, “If the engines of this airliner quit at altitude—say, 30,000 feet—how far can we fly before we hit the earth?” The captain said that it would vary depending upon the wind and the load, of course, but around 100 to 110 miles would be a good estimate. This is the same approach that many advisors use toward the end of their careers. Once the engines start to fade, they hold on until the end, keep the ride smooth, and make it last as long as possible.

The benefits of an internal succession plan versus an internal buyout are these: (1) As a founder, you have the opportunity to hire, train and work with your chosen successor for many years before retirement; (2) the junior partner is well-known to the client base and the practice’s referral sources; and (3) the retiring owner can retire on the job, remain in control of his or her own practice, and ensure that the client base is well taken care of for the duration.”