Having now met with hundreds of advisors exploring succession strategies, one thing has become increasingly clear: replacing the founder often takes more than one person.
That’s especially true in the independent and RIA space.
You may have a great operations person who knows the business inside and out, manages the team and keeps everything running – but that doesn’t necessarily mean they’re the right person to take over the client relationships.
Then you may have a younger advisor who clients really like and who could grow into those relationships – but they may not want to run the business.
And then there’s the financial side. Does the next generation have the capital to buy out the senior advisor?
For a successful practice built over 20 or 30 years, that can be a significant hurdle.
I’m a big believer in internal succession when the right people and structure are in place. But I also think it’s worth asking whether the next generation really needs to replace everything the founder does today.
For some firms, building out those capabilities internally makes sense. For others, partnering with a firm that already has the infrastructure and capital can solve much of the equation – allowing the next-generation advisor to focus on the client relationships and eventually step into the senior advisor’s role.
Who will run the business? Who will take care of the clients? And where will the capital come from?
The goal isn’t just to identify your successor. It’s to make sure they have the right structure and resources around them to actually succeed.