Pandemic has put advisor succession planning at the forefront


The COVID-19 pandemic has made it clear that business owners must have a business continuity plan, and that includes pension advisors, according to industry insiders.

“The pandemic has certainly increased the sense of urgency of all private companies when it comes to succession planning,” says Alicia Goodrow, partner at Culhane Meadows who focuses on succession planning. “Businesses, including retirement planning and wealth management businesses owned by healthy people in their 40s, 50s and 60s see the very real possibility of debilitating disease or illness. ‘death as a high risk factor that applies to them and their businesses. Clients are starting to wonder, rather bluntly, what their senior advisors’ plans are. “

Although Goodrow has seen some pension advisors plan for retirement over the next 24 months, she adds that “with the general upward market trend and the uncertainties surrounding estate planning and taxes, most planners who were planning to retire in 2021 are waiting a few days. years to take advantage of the market activity at this time. Many clients rely more on their planners in these uncertain times, so business is going well. “

John Anderson, managing director and head of practice management solutions at SEI, says he doesn’t see many pension advisors leaving the company yet.

“But what I find most of the time when people come out of a major event, whether it’s a stock market disruption or, now, a pandemic, is that people tend to re-evaluate their business, ”adds Anderson. “In all likelihood, some advisers will be like, ‘Is it time to move on and do something different or retire?’ Then there may be those who, due to the current inability to conduct in-person meetings or trainings with sponsors and attendees, will re-evaluate their business model. For those who wanted to capture the IRA [individual retirement account] turnover of retired participants is now more difficult because it is no longer in person. Consultants who have fully embraced the technology have done much better, and they are the ones who will likely stay in the industry. “

For pension advisors looking to sell their business, Goodrow suggests they form a mini “think tank” of outsiders, including their lawyer and an investment banker, if the practice is large enough, to help the advisor assess the business and develop an exit. strategy. This group can help the advisor determine whether they want a cash deal or whether they would work with a “seller-funded or seller-funded transition,” which she warns can potentially be risky. The advisor might also consider selling to a group of employees or merging with another practice, Goodrow says.

Anderson says advisors looking to leave the business should look at their business and assess it fairly. “It will give them a better understanding of its value and what the rebate could be like,” he says. “Many counselors believe their practice is worth more than it actually is.”

Mergers and acquisitions (M&A) between pension practices and registered investment advisers (RIAs) continue to be strong, said Amy Philbrook, senior market sales manager at Fidelity Workplace Investing. “There are a lot of motivated buyers and sellers, and private equity [PE] continues to play a big role in this space.

Additionally, with so much customer service now handled virtually, “Consultants looking to hand over their business to a successor or someone with a local connection now find that their market has grown,” says Philbrook.

Like Goodrow and Anderson, Philbrook says that a consultant looking to leave the industry should now consider hiring a consultant to help market their business and assess the potential market for the sale. For those who plan to leave the company a little later, perhaps in three to five years, “they have time to familiarize themselves with the market and potential markets and should also assess the value drivers of their business, increase them and network, ”she says.

If a deal is struck, it is critical that advisors ensure that the technology and service models are in place to ensure a smooth transition before notifying clients. “You have to put the infrastructure in place first,” says Anderson. “You also need to communicate change in a positive way. Point out the improvements the buyer will make to the table.

Philbrook agrees, “Highlight the core values ​​around the customer experience that you have in common with the business and tell customers what they can expect in terms of continuity and added value: how the transition will improve their customer experience and why they are incredibly lucky given to a partner.


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