Love at first sight may work in the dating world, but it certainly does not apply to succession planning. In fact, it’s quite the opposite – you are advised to play the field and embrace the dating game, as opposed to jumping straight into a marriage. Why?

Well, it has happened far too many times: an aging advisor brings in a junior with a bit of experience and a small set of clients so that they can diversify the firm, lighten the client load, and, hopefully, become the successor. The senior introduces this person to all their clients, promoting the new hire to the successor of the firm. They expect the junior to figure everything out themselves, and then they both end up frustrated when they are on different pages and the firm does not progress the way they would like.

Why does this happen?

Well, there are several reasons. Firstly, there is a lack of communication between the senior and the junior, which causes job dissatisfaction and office power struggles. As the junior has had no formal training, he or she is stagnant in their position. Although they want to do more, they do not have the direction to do it. Moreover, there are relatively no new assets from the Junior. For example, there is no growth in order to pay for the added expenses of salary.

The end result is years that are wasted, as the junior is either terminated or decides to leave. He or she may even take a few clients with them. The firm is no longer diversified, and the succession plan is at a dead end. The senior needs to go back to square one when planning for the future of the business.

A Blueprint for a more Successful Process

The reason why succession planning has gone so horribly wrong in this case is because the senior has rushed to hire a candidate. This is something that happens all too often. Instead of working together before hiring someone, they dive right in. You need to slowly integrate your business with the successor, and there are several steps in the process that should be followed.

This includes introducing each other as a formal continuity plan, as opposed to partner or successor, and signing non-disclosure documents. Also, start bi-weekly client reviews, share a business dashboard, and, after one year, begin the process of merging your businesses. During the next year, you should develop a service time, and after that, create a timeline for the retirement and make sure that the metrics the combined firm needs to hit are met before the younger advisor takes on a bigger role.

When planning the succession of your firm, don’t dive straight in because you are in a rush to choose a successor. This is more than likely to result in an even bigger problem a couple of years down the line. Instead, take the time to choose the right person, and follow the step-by-step process above when merging both businesses together.

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