Poor planning: Many older advisers still lack a succession plan

Adviser Ted Feight thought he had the perfect succession plan in place until his son decided to leave his firm to start his own advisory practice.
Now, three years later, the 63-year-old adviser still hasn’t identified the right person to take over his practice. Luckily, Mr. Feight, president of Creative Financial Design, which manages $25 million in assets, plans to keep working for another 10 to 15 years. But he knows he needs to begin training someone to take over soon.
A new study shows that 57% of advisers over the age of 50 have no formal succession strategy for their businesses, according to a survey of 500 advisers conducted by TD Ameritrade Inc.
The top reason advisers cited in the study for not having a succession plan is they hadn’t identified a clear successor for the firm. Another reason is advisers don’t feel it’s an important issue.
That’s where James R. Miller, president of Woodward Financial Advisors Inc., stands on the subject. At age 36, he feels he has plenty of time to design a succession plan for his firm, which manages $60 million in assets.
But he has seen why a plan is important. Just a year ago, he bought the firm from founder Henry Woodward, who has stayed on for a few more months to help clients make the transition. Mr. Miller also feels he’s got plenty of time because there are two other advisers on staff to handle issues if he were unavailable.
“I think it’ll evolve, but as of right now, there’s no clear cut plan per se,” Mr. Miller said. “When prospects interview us they want to know that there’s more than one person to go to.”

Shop Talk is a regular column detailing how financial advisers run their businesses. The column focuses on unusual or innovative ways to attract more clients. Suggestions or tips for Shop Talk? E-mail Lisa Shidler at [email protected] or visit the Shop Talk page at InvestmentNews/shoptalk