The Role of Succession Planning when Merging Your Financial Planning Firm

Simply put, succession planning is the process by which internal employees are identified and then developed for crucial roles within a merged financial planning firm. Failing to successfully execute succession planning can have a detrimental impact after a merger.

The Key Aspects of Establishing an Effective Succession Plan

There are four parts to developing a succession plan that is not only effective, but also comfortable for everyone involved. They include:

  • Identifying internal employees who can potentially take on more responsibility;

  • Developing those employees who are chosen for the additional responsibilities;

  • Encouraging the firm leaders to support the development of these new leaders; and

  • Building a database that can help management make better staffing decisions in the future.

It is important for senior management to work together to identify individuals who are ready to assume new responsibilities. Then, you must come up with ways to develop those individuals enough that they feel comfortable in those roles.

Problems with Retention and Employee Expectations

One of the most common concerns among financial planning firm employees during a merger has to do with their own personal development. The financial planning business is a very competitive one, and just like in any other industry, individuals want to climb the corporate ladder. If you catch wind of chatter from employees who are concerned with their personal career development, it is important to face these issues head-on. Otherwise, you may find yourself dealing with massive turnover and disgruntled employees. Part of your succession plan needs to include the criteria for obtaining promotions into roles with more responsibilities and, consequently, higher pay.

Succession Planning is Ongoing

You already know that the financial industry is constantly changing. While real estate may be a fantastic way to help your clients diversify their portfolios today, this may not be the case next year – or even next month. Part of succession planning, then, includes identifying new trends in the market as soon as they appear. This way, you can easily fill new roles within the company with individuals who have just the right amount of expertise and insight. In short, your leadership should be just as flexible as the market itself.

Don’t Forget Your Vision and Direction

One of the most common mistakes people make in the process of succession planning involves making plans for the here and now rather than the future. It is important for you, along with other senior management, to decide where you want your merged firm to go in the future. Do you want to acquire even more firms, or do you want to maintain your mid-size status and provide the best possible service to your existing clients? Determining your vision provides insight into the roles you need to develop not only now, but also in the future.

Succession planning is all about future success, not just making a merger easier in the short-term. You should start this planning as soon as the merger becomes a certainty in order to guarantee the success of your new financial planning firm.

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