Advisers wise to prepare succession plans

Financial advisory professionals should practice what they preach.
They spend the majority of their time working with clients and preparing them for the future.
They stress to clients the need to plan ahead and not be caught by life’s surprises.
However, these same savvy advisers and planners tend to place their own planning — particularly about succession — on the back burner.
It is time to face a few simple facts and tough realities: Advisers are getting older (their median age is 51), and they can’t live or work forever.
Ironically, baby boomer financial professionals who spend much of their day preparing boomer clients for retirement may ignore the obvious about themselves.
So to paraphrase the biblical proverb: Adviser, heal thyself. It is imperative that advisers and planners heed the advice they give others, and develop a well-thought-out plan for their own future.
Industry observers note that many advisers have uttered the words “succession planning” but then have done little beyond talk.
In fact, according to many industry experts, succession planning is usually done haphazardly when precipitated by a family or business crisis.
For the good of clients and the advisory business as a whole, advisers should make serious and disciplined succession planning a regular part of the management process.
The good news is that because the future looks bright for the financial advice business, there never has been a better time to map out a successful transition.
As reported by Jeff Benjamin in the April 30 issue, “the financial advice business has perhaps never been so rife with opportunities for educated newcomers.”
Several academics have explained that as the financial planning industry evolves beyond the traditional sales culture, recruitment efforts have shifted from selling skills toward more formal education in financial fundamentals.
As a result, the future of the advisory world’s growth and professionalism depends on a robust body of academic knowledge.
Luckily, that is happening. There now are about 100 schools nationwide that offer undergraduate degrees in the field of financial planning.
To be sure, fresh college graduates must gain the trust of the industry’s old guard, many of whom are rightfully wary of ceding too much responsibility too quickly to youngsters who lack real-life experience — no matter how credentialed or book smart they are.
But the tension between the experienced adviser and the motivated tyro makes the financial advice business exciting. And the fact that there are so many professionals on both ends of the experience and age spectrum makes succession planning possible, even if at times frustrating, exasperating and difficult.
Many academics are seeing positive signs that the two age groups are bridging the gap.
“Right now, it seems like the ratio of jobs to students graduating with financial planning degrees is better than in any other field of business,” Tom Warschauer, professor of finance at San Diego State University, explained to Mr. Benjamin.
Meanwhile, at Texas Tech University in Lubbock, 60 students will graduate this month with financial planning degrees, and each one has already secured a job, said Deena Katz, an associate professor at the school.
The next generation is ready to take the necessary steps toward a career.
These young people are prepared to work with advisers and planners, and can help their businesses grow.
Let’s hope the senior professionals in this business recognize the need to mentor these young people and guide them into the future.