Are you working to build your own succession plan? Are you an associate planner who wants to be part of your firm’s succession plan? This episode is for you!

It’s not a secret that succession planning is an emotional, often tension-riddled topic. So many times, a practice might have a succession plan in place with good intentions, only to have it go awry. This is largely due to mismanaged expectations, a lack of understanding and respect from all parties, and a lack of teamwork or synergy among the planners involved.

That’s where Christine Sjolin comes in. Christine is the VP of Operations at FP Transitions, a business that focuses on helping advisors build a seamless succession plan that benefits founders, advisors, and everyone involved at the practice.

We’re covering succession planning from the point of view of a lead advisor or founder and of a financial planner who might want to become a successor. There’s so much learning that every advisor can do when it comes to succession planning, and this episode dispels myths that stunt the growth of financial planning practices across the country. .

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What You’ll Learn:

  • How to pursue a succession plan within the practice you work for
  • How to talk to a practice owner about a succession plan
  • Why a practice owner shouldn’t view a succession plan as a “timeline until they leave the firm”
  • How to manage expectations as a planner who works for someone else’s firm
  • How to be a rainmaker for yourself
  • How small changes can make a huge impact as you move toward creating a succession plan
  • Why your “why” matters if you want to be part of a lead advisor’s succession plan

 

Show Transcript

Ep119 Transcript


Hannah: Thanks for joining us Kristine. Can you tell us what your role is at FP Transitions?

Christine: I’m Vice President of Strategic Development and Operations at FP Transitions. And basically what that means is that I have a very messy hat closet. I oversee operations. I do our own recruiting. I handle corporate relations. I’ve got folks here that help me out with each of those things, as needed. And then just trying to envision the future of our company.

And I work very closely with our CEO, Brad Bueermann, and with David Grau Sr. to try to figure out what we’re going to be doing in the next two to five years. Brad takes the 10-15 year view. He’s our great visionary. And then, I try to dial back into more achievable milestones as we get to that long-range view.

Hannah: So you really understand these new planners who are coming in and buying practices, the messiness of owning a business?

Christine: Oh, absolutely. Absolutely.

Hannah: One of the questions that I have … I mean, you guys deal with succession plans. I talk to so many advisors who are really interested in being a succession plan. But one of the questions that I’ve heard, or maybe that hasn’t been explicitly asked sometimes … it’s kind of at the root is, how do I get my boss to view me as a successor?

Christine: This might sound a little cheesy, but ownership is really a state of mind. For the advisors that I talk to that get into that minority stake, you ask them, what were they doing before they became a partner? What were they doing before they became an owner? They acted like an owner before they were given the opportunity.

So, what is the secret sauce to having a founder who offers you an investment opportunity and lets you into the equity circle? Well, you have to be acting like an owner anyway. You need to excel at your job. You need to not be afraid to put in those extra hours.

But it’s not just about hours, it’s about understanding and keeping the culture of your business. It’s about identifying opportunities and finding solutions. And you need to be able to communicate and have open communication with the owner of the business, so that they see you as a contributor, and they see you as an asset.

I hear from advisors that say that they are doing that, and it’s still not working. Keep doing what you’re doing. Don’t change … If you are taking ownership of your clients and taking responsibility, and you’re taking pride in your work, and you’re striving to excel as a financial advisor and a contributor within the business, then by all means, keep doing that.

It’s really a state of mind, and that is going to serve you well in your current position, or in a future position if you have to go some place else. It can be challenging … an entrepreneur to … well, on the one hand just to pay attention, and to realize that it might be time for succession planning, and that you are there and you’re interested and you’re capable.

Because … entrepreneurs is looking at the business and always trying to get it bigger and better and stronger, and that’s how they were able to build that business that you’re now part of. So, part of it is just getting their attention on the topic, and then making your case that you are an owner. And you have to do that with your actions before you can do it with your words.

Hannah: One of the things I hear is, you know, I’m trying to do this, but the owner just isn’t there. How do you know if the owner is ready to have these conversations? Or that the owners in the place, they’re open to us?

Christine: That’s a really interesting question, because you can’t do it based on age. We certainly had founders that have come to us in their mid 40s … or, my favorite is a 34 year old advisor who said, “I need a succession plan.” We’ve gotten an abundance of advisors who start way too late.

I think you need to approach it in a problem-solving manner. A lot of businesses as they start to grow, they extend beyond the abilities of a single producer, or even a single owner. And if all of the other elements are right, and the advisor is of a certain age, and they have a certain tenure in the business, then you can certainly approach your boss, and say, “Hey, we’ve grown x-amount in the past year. We’re taking on this amount of new clients. I am handling XY and Z responsibilities. I’m opening new accounts. I’ve mentored a para-planner. I am taking on seminars to bring in new clients. I think it would be really beneficial for our company to … let’s think about new owners. I would love to invest in the business, and I think that as a team that we can take this business even further together.”

You need to be able to build a business case for being a successor if you are unsure that your boss is there. But the important thing is having open communication, and approaching it from a problem-solving kind of scenario, especially if you don’t know if your boss is at that stage yet.

Hannah: So, you just said something really interesting, that you need to build the business case for the succession plan. And you work with so many different successors … Well, both sides of it, not just the successors. But what is a successful business case for proposing a succession plan for like your boss look like?

Christine: Well, I would say that it comes back to that question of growth and client communication. One of the things that I hear from the founders that tips their hand when it comes to biting the bullet on a succession plan, is that they hear from clients, or they hear from prospects, that they’re concerned about the career horizon of the founder.

And both the founders, we call them G1, the first generation. And then G2 or G3 for the successors. So, it’s kind of an easy shorthand that we use. But the G1s and the G2s will come together and say that it is really great client messaging when the plan is complete, to say, you know, if something happens to Sue or John, then there’s Pat, Sam, and Steve that are here that can continue to serve the clients. And they’re owners and they’re invested, and they’re not going anywhere. They’re part of the business, they’re part of my succession plan. And that is a tremendously powerful message to send the clients.

We’ve got planners that come to us, and they notice that they’re not getting new prospects, because they have a 40 year old professional who’s got a $50,000 stock plan that they’ve just received from their employer. Or they’ve got an inheritance from someone in their family who’s passed away, and so they have a windfall and they need to invest it, and for the first time in their life, they’re considering actually paying for financial advice.

So, they come and see a financial advisor, that they found on Google, or they had a referral from, but they’re looking at their time horizon as 20, 30, 40 years, whatever their life expectancy’s going to be, and the wealthy do live longer. And they’re looking at a financial advisor who’s a bit long in the tooth, and asking, “Well, how long are you going to be here, because I don’t want to have to change financial advisors over and over again?”

So, being able to present a good argument for improving that client message is one tack. The other is recognizing the growth of the business, and recognizing the capacity that you have to serve clients, and what you can do together better as partners. But first and foremost, you have to be acting as an owner, even when you’re an employee.

Hannah: So, one of the questions that comes up a lot is, do I need to be out there being the rainmaker, finding new clients? If you’re going to be an owner, in your opinion, do you need to be out there finding clients? Is that part of what it means to think like an owner?

Christine: I think especially in this industry, every job has a bit of a sales component in it. But I’ve been reading through the latest book on entrepreneurship by the Gallup folks, and they summarize it really nicely, that in any business that has grown and thrived, even in divisions within a larger corporation or organization, there are three personalities that grow and that lead a business to be really a sizeable consideration, rather than a tiny little boutique place.

And, that’s the alpha-conductor, the person who understands all of the daily operations and is really the sausage-maker. They have the alpha-rainmaker, and then the expert. So, the rainmaker’s just one part of growing a thriving business. And when we’re putting together succession plans, when we’ve got teams that are working with us to broaden that ownership base, I mean, sometimes it’s a one-to-one. There’s a single G1 and a single G2, but usually there’s a couple advisors that are participating in that successor role.

So, somebody needs to be a rainmaker, and that’s true in all of these businesses. In some circumstances, by broadening the equity circle and bringing in owners that are going to share the burden and the responsibility for making sure that the business runs smoothly day in and day out, that can free up the founder to just focus on relationships and rainmaking, and not have to be engaged on a day-to-day basis with making a sausage.

So, you’ve got employees that are reliable. You’ve got next-gen advisors that are maintaining the client relationships, they’re conducting the trades, they’re handling the paperwork. Maybe somebody’s interested in the marketing message to bring you into social media in an effective way. The founder, the G1 can focus on rainmaking. In the future, the successors need to at least build a team so that they have that skill set among them.

But the personality and the skills of a businessowner who takes that financial advising practice from nothing up to a million dollars in revenue and 200 clients, that’s not the same skill set that your successors need. And as next-gen advisors, you don’t need to be all things to all people. You do need to be adaptable in dynamic. But it’s important to have a couple of things that you do really well and recognize where you can leverage your skills with your partner’s, with the founder, with employees or interns.

So, you do need to be able to generate business. I mean, that goes without saying. But whether the business needs to transfer from a rainmaker to a rainmaker, it’s not as direct as that, it’s not as simple as that. So, we have a lot of conversations with founders actually, to try to make sure that they understand that the skill set that they’re looking for in successors is not the same skill set that they brought to make the business, and that’s fine. You don’t need to have builders in the successor pool, you need to have growers, you need to have managers.

And so next-gen advisors need to absolutely recognize that sales is essential. You need to be able to close the deal. And I don’t think anybody overlooks that. But you need to be able to collaborate and recognize where you do have shortcomings and leverage yourself with really great partners. And I think that’s part of making your business case too, is to approach your owner and say, “We’ve got two of us here, who make a great team, and we would like to build our future here with you. How do we get ownership of the business?” That can be the start of the conversation.

Hannah: The attitude is shifting of newer planners that I talk to who say, “I don’t want to be in sales.” Or they’re kind of … not fearful of that rainmaking, but they’re just not quite sure that being an owner is right for them. What would be your advice to those people who are really trying to find their place, if you would, on if they want to even be an owner?

Christine: Yeah. That’s a great question. I think it’s really important to figure out what ownership means to you, and what are you worried about with ownership? What are you resistant to? For a lot of our G1s, they got into this industry and really they boot-strapped it, and they came into the business when it was picking up the phone book and you’re dialing for dollars.

And as a next-gen advisor, you’re looking at that legacy going, “Oh boy, I don’t want to do that. I don’t want to have to start from nothing. And I’ve got student loans to pay, I can’t go without a paycheck for even a month, let alone four or five.”

So, what is it about ownership that is daunting or is distasteful to you? Before I came to FP Transitions, I worked in a couple of other fields, but for entrepreneurs the whole time. And the thing that those businesses had in common, was a lot of financial advisors is, a passion for service and a passion for the community.

I ran a vocational school and I worked in our local wine industry, and those businesses are so far removed from financial advising, but they have that common thread that they are passionate about their community, and they’re passionate about their field.

And I think a lot of financial advisors share that. And when you get into a field where you’re able to connect with your community, connect with others, and really provide an impact on their lives … financial planning isn’t all altruistic, but there are definitely warm fuzzies that come with working with your clients. You can focus on that and then define ownership however you need to.

The culture in each practice that we work is as unique as the people within it. And so you might have a firm that has a culture that is very sales-oriented, that is very aggressive, and if that’s not what you’re interested in, then you don’t want to be an owner in that business.

And it’s challenging and it’s daunting to get to that stage in your career, in your job at a certain place, and recognize that that culture isn’t what you want to be doing. That, that culture isn’t a place that you want to be for the rest of your career. And to have the courage to walk away, especially if you’ve invested four or five years with a firm and you’re not feeling it.

Of course, you don’t want to be an owner if the culture isn’t right, but that doesn’t necessarily mean that you’re not a very valuable part of the leadership team some place else, where the interest and the ethics are more aligned.

Hannah: You talked about succession planning, and I think one of the things that … Well shoot, now even being an owner of my own practice, I hear succession plan and I immediately think it’s a timeline to get rid of me. Does there need to be an endpoint for the original owner in the succession plan?

Christine: Not necessarily. For a good amount of G1s that come to us, if it’s not client-driven, it’s their own timeline-driven. And they’re starting to have notions of their own mortality. So they start a succession plan knowing I want to get out in five to ten years, and they have a timeline. But, that’s not necessarily a given, especially with teams that approach us when the founder is younger. It’s generally more of a growth plan.

And so, we’re actually trying to get the industry to talk about succession more in terms of business sustainability and business growth, because even if you let somebody into the equity circle, that doesn’t start a clock ticking for the founder.

And, we’ve got younger and younger advisors that are coming to us in order to create a team, to acknowledge the contribution and the commitment of their younger advisors, and to bring them into the equity circle so that they can all be stronger together, they can play off of each other. It provides flexibility to the founder, and there’s certainly an option that they could leave, but I would say, the minority of plans that we create have a fixed timeline as far as the departure of the founder.

Back in April, at retreat, the FPA released their report from the survey they did on succession planning, on the succession challenge, and it was still clear that most advisors, they recognized that they needed to do a succession plan but they weren’t doing anything.

And I think part of that reason is that misconception that, if I start a succession plan that means I’m on the way out. So, that’s why I think it’s important for both founders and the next-gen group to consider the steps that go into a succession plan as a growth strategy, and not the end of any single advisor’s career.

The same steps that go into building a strong and cohesive team, a team with alignment, are the same things that, yes, as a byproduct, do create a viable succession plan. But the near term outcome, and the near term goal is often that they can support their growth, and they can sustain their business, and they have more resilience within that team, because they’re all contractually locked together.

So, the long-term outcome is yes, succession plan. And certainly a good amount of founders are beginning with the end in mind, as you should. But the near-term outcome is that you have a better team to grow the business stronger and to create better alignment between your key employees, those most valuable employees that are also licensed advisors, and the founder, who has built that business from scratch.

Hannah: One of the things you keep talking about is growth strategy, and I talk to a number of advisors and they have quite a few situations where you have an older advisor, and they’re not really growing, they have a great life, and they’re getting a really good income doing what they’re doing. Does growth need to be part of a succession plan?

Christine: Growth is a necessary part of a succession plan, because that’s how both the founders and the successors are going to increase their own wealth. I think the next-gen advisors who come into a succession plan are doing it to further their own careers. And as a byproduct of that, or perhaps the leading factor of that, they want to be able to earn more on their own. And you can do it better, it’s the concept of building on the shoulders of giants, right?

If you’ve got a business that is running well, and the founder recognizes that, and is able to take some long weekends here and there, then the successors can come in and say, “Hey boss, you’ve built a great business. I want the opportunity to build a great business. And I want to build on top of yours. So, let’s see where we can take this in the next 10 years. I want to take the lead on that. Let’s do this as a partnership. Give me a chance.”

And use stronger terms if you need to, but for both the founders and the successors to really get the financial gains, they need to be growth-minded. More so the next generation than the founders, because they’ve already grown it. They’ve shown that they can do it. They’ve earned jobs. And that’s part of making the business case as well.

If you’re in a next-gen position, you need to, at the very leas, pay the lip service to your founders, but recognize that they have built this business from the ground up. And it may not be perfect, and there may be parts of running the business that your G1 is not great at, but you need to acknowledge that whatever the weaknesses may be, warts and all, they’ve built a business that you now want to be an owner of. And that’s part of the goodwill and the good faith that you can bring to the table when you’re saying, “I want to be an owner.”

The G2s that I was speaking with, I had a nice long conversation just last week, family succession. They say even though we’re the kids, you can’t be entitled to ownership. We didn’t feel entitled to ownership. My dad could have taken this and sold it out to somebody else. We have to earn it. I had to earn the right to get here, and I need to earn the right to stay here. And it’s part of, ownership is a state of mind. And recognize the work that has come from the founders to get where you are.

Hannah: What would be your advice to the person who’s kind of on the fence of whether or not they’re thinking of starting their own firm, versus pitching the idea of a succession plan to where they’re working now or possibly trying to find somebody who’s looking for a succession plan?

Christine: When you start to feel like you’re swimming upstream, what do you do? If you’re not getting anywhere with the conversations with your founder, how much do you continue pushing? Or do you just go and open your own? I mentioned that I handle the recruiting, and I get to wear some of the HR hat here. And the expression that comes up in these kinds of situations is, when expectations turn to hope, that’s when it’s time to end it.

Hannah: Oh, gosh, that’s good.

Christine: I don’t know where that came from, aside from Brad Bueermann, but Google will probably tell you. When you’re working with somebody, no matter what the relationship is, if it’s your superior that you want to have try to make some changes or give you some opportunities or recognize your contribution, and your expectation is that you’re going to go out and bring in a great client and they’re going to come in and be part of the firm and that’s going to generate a longterm relationship, and you’re going to get credit for that, then that’s terrific. You should be building the business, and bringing in clients and doing a great job, and getting credit for it.

But when you start to come into the office every day, and you’re hoping things are going to be all right, and it could go badly … Well then, you need to take a very close look at yourself and have the courage to recognize what it is. And, maybe that leads you to open your own RIA, if you are an entrepreneur, and you have that within you. But the solution might be otherwise to recognize what it is and have a candid conversation and say, “I think my career continues elsewhere.”

Next-gen advisors are very hard to find qualified talent, and if you can find a place that is going to be the right cultural fit for you, then you can thrive.

Hannah: I know people are listening to this, and they’re like, “I’m qualified talent, and I cannot find anywhere to work.” Where do people go to find those great fits?

Christine: That’s one thing that I wish we did better here, matchmaking for the G2s in an employment capacity. You’ve gotta look at it the same way that you would for finding clients. That’s the place that you have to be a rainmaker for yourself. The place that I tend to go is, just referring into recruiting firms, go back to your College of Financial Planning Alumni Association and make connections there.

The FPA is a really great resource. Attend meetings and let people know that you’re looking to be part of somebody’s business, you want to be part of somebody’s succession plan. Make sure that you have clear expectations and that you communicate those to the people that you’re networking with.

If you want to be part of a business and part of a succession plan, define what that means in a cover letter. Are you coming into the business because you want to take it over? Or are you coming into the business because you want to be a valuable part of the team, with a longterm plan to join the equity circle, and continue growing the business into the unforeseen future? But you need to be able to be a rainmaker for yourself when it does come time to make that decision.

Hannah: You talk about expectations with succession plans, and I know you have so many great success stories, but what are realistic expectations for the G2 advisors, for the next-gen advisors to have walking into a succession plan?

Christine: One of the things that we really try very hard to do when we’re putting together a succession plan, we end up doing some compensation re-engineering. It’s not unusual that clients come to us and they’re using an entirely commissions based structure, a revenue split for all of the employees. So, we do a lot of re-engineering to put them into a flat salary, a predictable salary-based compensation with bonuses that are based on measurable business objectives.

The goal when we do that is to not create a paycut for anybody, because that doesn’t generate good faith right off the gate. But in the process, a reasonable expectation is during the first couple of years, you’re not going to see a lot of changes financially.

You need to be prepared to invest and that’s going to take some give and take, but one of the things that we do … and I, of course can’t speak for other consultants or other … if you go to a local attorney and have things put together, but we create the mechanism for the next-gen to invest in the founder’s business, and then we model out the cashflow so that the business has a profit line so that those note payments can be made.

And in the first couple of years, the majority of the profit that a successor would receive does get committed to the note payment. But as the business grows … and this is why I say growth is essential for both the founders and the successors, as the business grows then the successors will see their profit distributions increase, and a smaller portion of that is going to go to satisfy their note obligation to buy out the founder.

So, that’s why we do the work to make salary predictable, so that you can meet your needs and have a comfortable lifestyle. That’s incredibly important, especially in this industry. But we also make sure that the salary obligation is equally predictable, so that the team can work together to drive profits, to grow profits. Because if you don’t have your compensation within the business structured in a way that is fair and predictable, then it’s very hard to grow the business and to be profitable when you have multiple owners.

So, one of the first things that I would say to expect is small changes on the outside. One of my favorite case studies is a team of a founder with four junior advisors, who had come to us after going through all kinds of management psychology exams. And they had gone to at least two other consultants who had put them through this battery of tests before they started building a plan for them.

And the psychologist had said, “This team won’t work. You’re not compatible.” Or, “You’re not complimentary.” Or whatever it was. “You could invest however many thousands of dollars in a plan, but we’re predicting that it’s doomed to failure on the outset, so keep that in mind.” And they went, “Well, nuts to that, I’m going to go to somebody who says it’s possible.” And they eventually found their way to us. And we said, “Well, if you guys are committed to working together and you want to do it, let’s see what we can put together.” It’s their boat to row.

So, we worked with them. It was about a $2 million business, in terms of value. So, we worked with them, we engineered the compensation, we normalized the compensation, we created a profit-line, we helped to structure the note. The seller did take the note personally, so there wasn’t big financing involved in the initial traunch. And there usually isn’t, so that’s why we have to have profitability coming through to the bottom line.

But the four junior advisors all got an equal stake of ownership, and then they signed their documents, and they went on to run the business. A couple months later we heard from the founder that he was doing groceries or something on a Saturday, and he drove past the office, and he saw all the lights on, and started shaking his fist, “Those boys, they left all the lights on. I bring them in to be owners, and they can’t even control the electricity.” And he pulls into the driveway and goes into the office. It was an office that was in like an old house, in a historic neighborhood, that kind of thing.

And he goes inside and he sees that there’s three of the guys that are sitting in there working on financial plans and cleaning up documents, and they’re in the office on the Saturday to do the work, and that’s why the lights were on. And the founder’s like, “Oh, hi. I didn’t expect to see you here.”

But they all knew that they made client commitments, and that they were going to keep the clients happy, and they were going to make sure that they hit their revenue targets that they had all created, so that they could get their profit distributions. They needed to make sure that they got all of the work done, so it wasn’t everybody, but they each had their own little story afterwards. But they were in the office on the Saturday to make sure that everything got done, much to the founder’s shock and surprise.

So, kind of a funny little anecdote on the impact that being an owner can have on an employee mentality. You’re just a little bit more committed. That story is a fun one, because the founder did … that succession plan actually lasted about four years. And then the founder had gotten a bit of a taste of extra freedom, and accelerated his timeline to retire.

So, we started out with four successors, one of them did fail. So, the four other owners, the founder and the three remaining successors had a conversation with the one person who wasn’t a great fit as an owner. Their mentality actually didn’t jive with the rest of the team. And they went back to their shareholders agreement and then they bought out that one junior partner. But the other three remaining advisors did accelerate and they bought out the founder after about four years, because the business had been growing and they had been working so well.

And the founder got some extra time out of the office and went, “You know what? I have a couple of hobbies that I’ve neglected, and I’ve been able to enjoy them in the last four years, and I think I’m going to enjoy them a little bit more.” So, they just went forward and called the bank, and they took over the whole business, three equal partners at the end of the day. And now, they’re leading the ship all on their own.

Hannah: When people become part owner, do they get to be part decision maker at that point, or how does that usually work?

Christine: There’s a lot of concern from founders around giving up control. It’s important to have a seat at the table. When you’re in a founder’s position, and you open up the equity circle to let somebody invest in the business, you have to listen to their suggestions. You have to listen to their opinions. It’s just being polite, right? But when you’re talking about opening up a 10% investment opportunity, then the founder still owns 90% of the business.

In that kind of a situation you still have all of the control, and so the minority partnership is a great opportunity. For some people it might be very frustrating, but it’s about creating teamwork, and synergy. And the founder will maintain the decision making … will have the decision making seat. But even as a minority partner, you need to be able to speak up and have your voice heard.

There’s a team we worked with down in Florida who was totally terming when they addressed the dynamic between the three advisors, the founder and the two successors. And one of the successors had said, sometimes it was frustrating to listen to the G1 go on and on about how, “I built my business from nothing, and I know what I’m doing.” And the successor, said, “I come up with what I thought were great ideas, and he’d just shoot them down.” And it’s frustrating because sometimes it turned out that he was right.

And there is a lot to be said for experience. And it can be very hard for a next-gen advisor who’s got 5, 10 years of experience to go, “You just shot me down.” But the founder might have 25 or 30 years of experience. And so, they do get to make the decision. And the important thing is to keep the right perspective.

And if you’ve come up with an idea that gets shot down, then approach it from a different angle, if you really believe in it. And, see if there’s a different approach that you can take to get to that goal, that whether it’s a business development idea or a technology investment, or deviating into a different niche, you’ve gotta be able to make the business case for it. So, you should have a seat at the table, you’re an owner, but for most plans, until you get to that 50-50 level, the founder retains decision making control.

Hannah: If somebody’s really interested in succession planning, where can they go? What are the other resources that they need to be reading or tapping into to really prepare themselves for these conversations or being a successor?

Christine: I don’t want this to sound, usually self-serving, but it’s going to come across that way …

Hannah: I keyed you up.

Christine: David Grau Sr. wrote a really great book a couple of years ago, Succession Planning for Financial Advisors, and there are so many people that we talk with that start their conversation with, “Well, I read David’s book …” And it’s a good tool, because it talks about some of the different strategies, and dispels some of the misconceptions on succession planning as the plan that starts the stopwatch for the founder.

And so it’s actually … I’ve been trying not to say this for … “How can I get my boss to think of me as a successor?” “Give him a copy of David’s book.” David is the founder of our company. He’s seen a lot of these kinds of struggles and changes that an entrepreneur goes through building a business from nothing, and he’s focused exclusively on financial advisors his entire career.

So, the information that’s in that book speaks to founders and successors, but really a lot to founders, explaining the mechanics, the financing, the benefits, the incentives. He explains it all in a lot of detail. So, that would be the first, the most powerful resource that I would send people to.

I’d also go to FPA meetings where you’ve got advisors that are talking about the topic, and just see what kind of conventional wisdom is out there, and then go back and read the book again.

Hannah: Oh, that’s great. Well, is there anything else that you want to be sure that we cover?

Christine: Well, one of the things that I hear from a lot of folks is just, bloom where you’re planted. If you can make the most of your situation, and be an owner, and create the relationship with your founder so that they can see you as a successor, because you’re just thriving where you are, that’s what I hear from a lot of the successful successors, is some variation on, bloom where you’re planted.

For founders that aren’t sure where they’re going to look, there was a podcast that I was listening to just the other day about CEOs, and they referenced a study that came out just after the crash, it was like a 2009, 2010 academic study on corporate performance when CEOs changed. And the study found that when the CEO of a publicly traded company was sourced internally, was promoted internally, the performance of that company was somewhere 20-30% higher than the firms that brought in an outside CEO.

A corresponding figure, the CEOs that were sourced externally were millions of dollars more expensive for these companies to recruit and to hire. And this is looking at Fortune 500 companies, so these are looking at multi-national businesses, right? But, the same kind of concepts can be applied, looking inward at the financial planning industry. A lot of founders are looking at their successors and going, “No, I need to bring in somebody from the outside.” Or, “I’m not ready to let this go, and I’m just going to sell it externally.”

But if you’re trying to find a person that’s going to do the best job for the business, the internal recruit, the internal successor knows the most about your business, knows the most about your clients, and can generate stronger, better returns for your business, than necessarily bringing somebody in from the outside.

So, for the successors, bloom where you’re planted. Make the best of your situation and think like an owner. And if you’re a founder, take a look at your internal staff, because it might be that the most effective person to continue your legacy and to build the business on top of your shoulders, is that person that you’ve already hired and trained and indoctrinated into your culture and to your client needs.

Hannah: Well, thank you so much for joining us, Christine.

Christine: Thank you, Hannah. It’s been very nice talking with you.

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