When the shoemaker goes barefoot

“How does this financial mess affect me? Should I be worried? I can’t make sense of all of this stuff without Rob. I really miss him.”

That was the frightened voice message I received last week from my 81-year-old mother.

Rob was my mom’s financial adviser. A trusted professional, he provided my parents with financial peace of mind for more than 20 years.

Rob died of cancer a few weeks ago at the age of 67, and now my mom feels lost.

She had little time to adjust.

Six weeks from the time he was diagnosed with advanced cancer, Rob died.

The sudden loss took everyone by surprise. Neither he nor his son John, who also is an adviser in the family business, had prepared for the unexpected transition. (For the sake of privacy, I have changed the advisers’ names.)

Understandably overwhelmed, John didn’t quickly reach out or communicate to my mother or to other clients.

He should have.

When John joined the firm a few years ago, Rob continued to handle older clients, who came to trust him and his style. Apparently, Rob and John decided that the latter would work with newer clients (or maybe they never discussed this at all, and the arrangement just happened).

Rob probably felt there would always be time later for a transition. That proved to be a bad business decision, because I know at least one client who now feels lost.

“I don’t know much about John,” my mom told me. “I guess I’ll try to work with him, but if it’s not good, I am going to have to leave and find someone else.”

I asked her why she felt that way, since the financial game plan created by Rob would remain the same. I suggested she not jump to conclusions or be hasty in her decisions.

Unfortunately, it is nearly impossible to change the mind of an 81-year-old Sicilian lady.

“Hopefully, John knows what the heck he is doing,” she said. “I liked his father; if I decide it’s too much for me to deal with him, I’ll leave.”

John’s situation underscores the need for succession planning in the advisory business. Advisers must not only consider their own retirement strategy but contingency plans as well should there be an unexpected death, disability or illness.

In John’s case, the most pressing business problem began when his father died. Since my mother isn’t the only client contemplating a move, John should develop a short-term plan that lays out a way to meet each client and give him or her a reason to stay.

Of course, Rob should have had a contingency plan in place outlining a sudden transition so that all this scrambling would have been unnecessary. I suggest that any contingency or transition plan focus on retaining trust.

My mom keeps saying how much she trusted Rob and how she felt at ease when she met with him or spoke with him on the phone. With clients such as my mom, trust develops slowly over many years.

It would have made perfect sense for Rob to have brought John into his strong client relationships earlier so that trust would have been transferred naturally. It is unfortunate that this didn’t happen.

Rob, like many of you, poured much of his life into building a successful business. I am sure that he thought that the business one day would be his son’s.

Unfortunately, that day came too soon. And contrary to the planning he espoused and implemented for his clients, he neglected to prepare and plan for the future himself.

Jim Pavia is the editor of InvestmentNews.

Related Topics: Just Thinking