Whether you choose one or more successors, the first step is to determine whether you will pass the torch internally or externally. If you are considering an internal successor, time will need to be allocated for mentoring and training to ensure that the practice you have built continues uninterrupted after you leave.

It’s imperative that you and your internal successor are on the same page when it comes to the future of the company. Don’t know where to start? Holiday parties or family gatherings can be a good place to engage in one-on-one conversations about career ambitions, aspirations and development goals.

If your plans include an external successor, you need to ensure the right candidate has the right qualities to ensure a smooth transition, including:

• Alignment with your practice’s values ​​and culture
• The desire to learn more about your business, your customers and your staff
• Comparable service model and investment philosophy
• Relationship management skills
• Strong work ethic
• Leadership skills

Creating value in practice

The succession planning process provides an opportunity to evaluate your business holistically and identify opportunities to build value. To make your practice as attractive as possible to potential buyers, it is important to demonstrate sustainable growth, efficiency and strong relationships with clients and staff.

Asking yourself the following questions can help you highlight the strengths of your practice and identify areas to address.

• What percentage of your current business mix generates recurring revenue (fees, trails, 12b-1, renewals, financial planning)?
• What adjustments can you make to increase your profitability?
• How can you better leverage technology to improve your efficiency?
• What are your growth and customer retention rates?
• Is your practice financially responsible? Do you establish and follow budgets to track expenses and keep costs within budget?
• How strong is your brand?

You may also want to explore mergers and acquisitions as a way to provide a liquidity event and help create value in your business.

Adjust if necessary

It is important to remember that any estate plan you create should be viewed as a living document. Evaluate your plan regularly and make updates as necessary.

These include key team members leaving, business or market dynamics changing significantly, or your personal plans changing.

Find a trusted partner

Whether you are seeking estate planning advice or considering a liquidity event, it is important to find a partner who can help you achieve your business goals while ensuring there are no legal, tax or financial consequences. or financial associated with your plan.

When looking for a partner, some questions to ask include:

• How will my brand, investment philosophy and customer service model work once I leave office?
• How will I be compensated for the business I built?
• How will this partnership help me optimize my daily operations and allow me to focus on my customers?
• How will you help protect my legacy?

Jeremy Holly is Executive Vice President of LPL Capital Partners, which provides financial planning, advisory and investment management services.