Adviser’s Death Can Leave Clients Scrambling

“When a financial adviser dies suddenly and without a succession plan, clients are often left in limbo and the adviser’s family can get stuck, too, watching the business’s value quickly evaporate.

…the SEC says it believes “an adviser’s fiduciary obligation to its clients includes the obligation to take steps to protect the clients’ interests from being placed at risk as a result of the adviser’s inability to provide advisory services after … the death of the owner or key personnel.”

Wall Street Journal

In our experience, advisor succession planning works best when an advisor hands off his book to another advisor or to team members when they’re still in the growth stage of their business.  Once an advisor reaches their mid 60’s or above, many clients have already jumped ship.  They’re not about to entrust college or retirement planning  to an advisor who is not likely to be a long term player. Advisors who wait too long to execute their own succession plan have a lot less to pass on and therefore receive far  less lucrative deals than they would have if they had made their move earlier.

Given that the SEC has started to talk about at least one scenario in  advisor succession planning  as included under the rubric of fiduciary responsibility- I wouldn’t be surprised if SEC rule making isn’t far behind.

It seems to me that advisors will do best for themselves and for their clients by proactively formulating a succession plan.

If you are an advisor with a practice to sell, or if you’re looking to partner with a younger advisor, please contact us. We have an array of options for you.