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The Biggest Misconception About Succession Planning

Updated: Jan 4

I have the good fortune of working with some of the best and brightest financial advisors in Canada. These advisors are smart, successful and savvy businesspeople. Every one of them has reached an enviable level of success such that they are able to start thinking about the next phase of their life, business and legacy.

But what I’ve noticed is that while all of these advisors have devoted considerable time and energy to thinking about the next phase of their life and career, very few of them have developed a comprehensive plan to one day monetize and transition their business and their role within it. This realization has always surprised and perplexed me. After all, these advisors all know that at some point in future they will end up leaving their business and the industry. Not only that, they also know that prior to them leaving the business, their role as an advisor will also very likely evolve and change to something other than what it is today. It’s inevitable, and also very natural.

So how could it be that these advisors who have a plan for just about every facet of their business, do not have a plan for the inevitable transition of their business and the evolution of their role within it?

When I’ve asked advisors why they haven’t yet created a robust business transition, monetization and succession plan as part of their broader business strategy, their responses include the following familiar business-related refrains and frustrations:

Lack of Capacity: Too busy. Instead of controlling the business, the business is controlling me;

Growth and Profitability: Not enough of either. I need to first focus on increasing the growth and profitability of the business;

Timing: Retirement is still a few years away; I’ll deal with it later. While important, it’s not urgent;

Degree of Difficulty: I’m not sure how or where to even start;

Sound familiar?

To me, however, these reasons don’t ring true. They seem more like excuses than anything else.

The more I talk with and to advisors, the more I tend to believe that the real reason that most advisors don’t have a business succession or transition plan in place is that they equate the concept of ‘succession’ with the concept of ‘exit’ and the sale of their business and their eventual exit from the industry.

And when faced with the choice of planning their own exit or planning for the growth of their business, they choose the latter every time. It’s understandable. But it’s also misguided.

The Succession Misconception

It’s this false equivalency – that Succession is the same as Exit – that is the biggest misconception in our industry, one which often leads advisors to make poor decisions and suboptimal choices.

What I instill in my clients and the advisors that I speak to is that a robust and well-thought-through Succession plan is as much about growing your business, increasing the equity value of your firm, and maximizing all the investments you’ve made in your business throughout your career as it is anything else.

Think about that statement for a minute. Succession is as much a growth strategy for your business as it is anything else. This represents a fundamental shift in perspective and mindset as it relates to ‘strategic planning’ for the already successful and accomplished advisor.

The Benefits to Changing Your Mindset

The failure to see Succession planning for what it really is and what it represents – in terms of strategic, operational and financial benefits to you and your business - is not only a huge misconception, but it then leads to significant missed opportunities for advisors.

Don’t believe me? Consider the following three real life instances.

Attracting and Retaining High Net Worth Clients

In 2020, an already successful advisor in BC wanted to take his business to the next level in terms of growth and profitability. He developed a new growth strategy aimed at the high-net- worth market. He wanted to take his already large business (over $200M in AUM) to the next level by targeting business owners and executives. He retooled his operational platform – his team, service model, product offering, and fee policy – and his marketing strategy to better meet the needs of this market.

What he didn’t do was think about and develop his succession plan for the business.

Not an entirely unreasonable approach, right? I mean who would think twice about omitting development of a succession plan when your strategic priority is to target the HNW market?

Unfortunately, however, just about every one of the prospects that he met wanted to know and learn more about his firm's succession plan. These prospects – all in their late forties and early fifties – wanted to know that the firm they were about to choose would be around for the long term. They were emphatic about the fact that they did not want to have to go through this process again in 15-20 years.

Interestingly, the issue of succession was what this advisor characterized as a ‘knock out’ question – meaning that, the fact that he didn’t have a sufficiently compelling succession plan in place meant that prospects knocked him out of the selection process.

So, this talented and successful advisor, who was able to deliver great answers to questions about investment management, client service, value and the like, struggled out of the gate to achieve his growth objectives due to his lack of a clearly defined succession plan.

He came to me shortly thereafter with a request to help him to develop a succession plan that would form part of his pitch and proposal to attract HNW clients. Three years later, this advisor has grown his total AUM by over 50% to over $300M.

Creating Freedom of Time, Relationships and Purpose

In 2021, an advisor in the GTA was managing a very successful bank brokerage firm. He had close to $300M in AUM, a team comprised of 2 licensed admin support and 1 associate advisor, and a nice tight client base of just close to 150 households with average assets of $2M.

Sounds perfect, right?

Unfortunately, this advisor was run off his feet servicing his book. He was a prisoner of his own success. He had no time for himself or his family. Most of his time and energy was spent on day-to-day operational and administrative issues and not enough on what he loved doing most and what he did best, which was meeting with clients, bringing in new business and delivering financial advice and solutions. Making matters worse, his business had stopped growing. Whereas in previous years he would routinely attract $15-$20M in new assets, the previous 3 years had seen an average influx of just under $8M per year. Not bad but not anywhere near his standards or expectations.

Despite making a great income, he was devoid of any real freedom of time, relationship, or purpose. Or, for that matter, any joy in the business. He came to me seeking a solution.

When I suggested to him that what he needed was a succession plan aimed at creating for him the time, purpose and relationship freedom that he was desperately craving, he looked at me dismissively and said that he had absolutely no interest in selling his firm and retiring.

I agreed with him and indicated that succession does not equal exit.

I explained that Succession planning is about creating a business model and structure that doesn’t rely solely on the founding advisor and enables that founder to evolve their role and stay engaged in the business doing only what they do best and love to do.

With this kind of perspective, most advisors soon begin to realize the myriad of value-added options and scenarios that are available to them with a well-thought-through Succession plan.

This advisor’s succession plan ultimately led to him acquiring a mid-size firm that enabled him to add the skillset and capabilities that his firm lacked and that he needed. By doing so, he completely evolved the nature of his role in the newly combined entity. He continued to stay engaged by managing a portion of the firm’s top households while also playing a greater role in new business development but with more manageable hours.

Within a year, the new firm began to grow again and had brought in close to $15M in new assets. More importantly, this advisor had gotten back his freedom and rekindled his joy in the business.

Attracting and Retaining the Best and the Brightest

The last case I’ll mention is an example of an advisor developing and using his succession plan to attract and retain the kind of people, skills and capabilities his firm needs to achieve his long-term growth objectives and his own personal goals and objectives.

An advisor in SW Ontario hired, as part of his broader growth strategy and succession plan, 2 new individuals - a junior advisor and a financial planner – to join his already strong team to help the firm grow in the HNW market. Almost immediately, the firm started to see success and within 2 years, the firm grew from $110M in AUM to $150M and was positioned to add even more scale without incurring much additional cost.

The risk to this advisor’s continued success, however, was obvious – the loss of key personnel.

To mitigate this risk, we leveraged his succession plan to retain his key people and ensure the sustainability of the firm’s recent growth. He started to transfer partial ownership interest in the firm to his key people over time in tranches and began to delegate to them some of the day-to-day management responsibilities of the firm.

In so doing, the advisor aligned team members’ interests with that of the firm, continued to evolve his own role within the firm, and began to monetize his stake in the business and preserve his own financial future.

The firm is now solidly positioned to continue to achieve its ambitious growth objectives and has created the platform for future sustainable growth.

The Bottom Line

If there’s one key point that you take away from this article, I hope it’s this:

  • Equating Succession planning with your retirement and exit from the business is a giant misconception.

  • Instead, succession planning should be viewed as a core element of every advisor’s growth strategy.

  • Top advisors realize that they need to incorporate short as well as long-term thinking into their strategic planning. Indeed, they need a ‘master plan’ for their business that seeks not only to increase value in the near term but also to maximize, protect and monetize that value over the longer term. This is strategic planning at the highest level.

  • The failure of advisors to see Succession planning for what it truly is represents one of the biggest missed opportunities in our industry.

If you’re interested in learning more about TPC’s approach to strategic planning and how to create your firm’s ‘Master Plan’, please feel free to reach out me directly at If not, no worries, just keep reading our future posts on this topic.

Till then...


Tell us why you haven't started planning?

  • I'm too busy.

  • I've been focusing on growth and profitability.

  • I feel like I still have time.

  • It's difficult so I've been avoiding it.


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