Don’t Keep Staff In The Dark About Your Succession Plans

Recently we talked about how important it is to communicate succession plans to clients before and during your actual transition. So often, advisors overlook the importance of communicating their succession plans to staff. Many advisors think it’s best to wait until after the deal is closed before telling their team, but this is something we have seen create tremendous problems for both the selling advisor and the buyer.

Trust and communication are a significant part of the advisor-staff relationship. Which is why staff members can often feel betrayed when they learn about a practice sale after the fact. Feelings of betrayal can cause some staff members to seek employment elsewhere, which can cause issues if a buyer is relying on staff being part of the deal. It can also lead them to exhibit behaviors that can make transitions difficult, or in rare occasions, to even sabotage efforts by badmouthing the advisor or soliciting clients away to a different firm.

Staff are also a crucial element to successfully transitioning a practice. Client attrition is one of the biggest risk factors in a practice sale and can have significant economic impact to both buyer and seller. Staff play a critical role in positively communicating the transition to clients, in aiding the buyer in onboarding clients, and in integrating the two operations together. Staff who feel trusted enough to be involved in a succession before it happens will help ensure it is a successful one. Which is why it’s important to let them know when you are seeking an outside buyer, and what their role will be in the transition. It’s also crucial to introduce them to the buyer so they can build rapport with the new leadership and to engage them early and often in the transition strategy so they can help with migrating the practice.

Nobody likes to be in the dark, especially loyal staff who have committed to serving the advisor and their practice. Communicate succession plans far in advance of listing a practice for sale or engaging a buyer. Include staff in the transition and demonstrate often that you value their loyalty and contribution to your practice. By doing so you ensure that you not only leave a strong client service legacy, but that your overall advisor legacy is not tainted by bad feelings or a poorly managed transition.