Stuart Silverman, Chairman and David Canter, president of Bluespring Wealth Partners, share tips for effectively devising and executing a succession plan.
Nathan Place: Well, hello and welcome to Leaders. My name is Nathan Place. I'm the retirement reporter at Financial Planning, and today we are talking about succession planning, which is both an extremely important topic for the wealth management industry and also extremely difficult. Luckily, we have two experts joining us today. David Canter, president of Bluespring Wealth Partners, and Stuart Silverman, the chairman of Bluespring. Among other things, Bluespring coaches business owners on how to plan and implement a successful succession. David and Stewart, welcome!
Stuart Silverman: Thank you, Nathan. Good to be here.
David Canter: Yeah, thank you, Nathan. It's great to be here.
Nathan Place: Yeah, yeah, likewise. Thank you guys so much. Okay, so before we dive in, I just want to remind our audience that if you have a question, please type it in. We will answer audience questions at the end, and the more questions you type in, the more interesting this will be. So why don't we just dive in, we'll start with my questions. So David and Stewart, why don't you give me a little bit of background and tell us a little bit about how Bluespring helps advisors with succession planning?
Stuart Silverman: Sure. As an aside, for those who don't know who Bluespring is, we are, well, we're an M&A company. We acquire wealth management firms, but as David and I frequently say, in fact, always say, we're more of a consulting firm, a business consulting firm that happens to be in the acquisition business. So we spend a good deal of our time talking about succession planning. In fact, the whole foundation and reason we launched Bluespring is because we think there's a problem in the industry. If you combine the aging demographics, as you know, the average advisor I think is 57 years old or whatever. And frankly, the lousy job we as an industry have done at attracting the next generation of talent. In fact, the last stats I saw were I think 11% of the – they were back in 2019 – 11% of the advisors were under the age of 40, which is just horrible.
We're in a wonderful industry. We get paid a lot of money to help people and do the right thing and make a difference and be impactful. Yet the next gen is not coming into this business. So when we launched Bluespring, that was our primary focus and one of our foundations or our pillars of how we structured this. And what we do is if, when we acquire firms, and we're very picky about the firms we acquire, we're looking for high-end boutique or high-end wealth management firms, we look at the successors that they have in place, the G-2s, as some people call them, and we kind of assess them. If they have the right G-2s, we work with the team and we put them into a sort of program of training. If they don't, we go help them, try to help them find successors.
But in the end result, we have a very robust successor academy, a two-year program focused on how to train a future leader to actually run a wealth management firm, because no one's really teaching that. And it's everything from practical classroom idea sharing and case studies and study groups to ongoing coaching and business consulting, and really teaching them how to run a firm. We also work very closely with next-gen planners to talk about their career trajectory, because we want to show them that the industry has changed. It's no longer, when I came in 40 years ago, a kind of eat-what-you-kill business and start from scratch and cold call. It's a very sophisticated business. We do a lot of planning, so more advisors, younger planners, are joining successful wealth management firms, and we work with them on their career trajectory to teach them, to show them that they can have a long-term career. We want them to stay for the rest of their career. So we put together very compelling incentives and training so that they want to stay for the rest of their career and see this as their future and see themselves as an intrapreneur, more or less than an entrepreneur. They're running a business, they get all the controls, but they also, and all the upside of it, but they have a very large institutional backing from a firm like Bluespring.
Nathan Place: Right, right. David, is there anything you wanted to add to that?
David Canter: Stuart said it quite well. I would say that I'm optimistic about some of the statistics that he shared. I think we're getting, we're going to turn the corner, and it's really to the efforts of folks like my good friend Kate Healy at the CFP board, who's really focused on bringing in that next generation of talent to the profession, and making sure that we have diverse talent and putting the right incentives in place. Because it's a noble profession. You're helping people, you're helping people with the most important part of their financial lives, that planning aspect. And I will say the other thing that beyond grassroots roots, but folks like myself and Stewart, we do a lot of speaking in front of colleges and universities and their financial planning programs. So Stuart is right to point out the 2019 statistics, but I have an optimistic and hopeful point of view. I know as does Stuart, and that's part of the reason why Bluespring was created, is that we can sort of attract and find that talent to run, operate, and grow these financial advisory businesses.
Nathan Place: Right. And obviously as you alluded to, Stuart, you stole the statistic that I was about to bring up. This is a very important topic for the wealth management industry. The average age of an advisor last year, financial advisor, was 57. It's an aging industry. It's definitely a need of some successors, but this is something that a lot of businesses struggle with. According to one poll, 56% of American H.R. workers say their companies have no succession plan at all. So obviously important. And at the same time, it's difficult and a lot of people struggle with it. Why is it so difficult to pull off a successful succession plan?
David Canter: There are a number of – and I know we're going to get into it – there are a number of issues to think about. There are finding the right talent, thinking about that talent, not just in terms of one person, but as I like to say, how can you embody a portfolio of skills? So Nathan, you may have a singular group of skills and talents to run your business, but as we think about succession, we may need to find... The other piece of it is there can be emotional and psychological aspects of it, but that's where we at Bluespring come in to help pick apart what is your true objective, what are your goals? What's going to make you achieve your highest level of not just satisfaction from an economic standpoint, but from an emotional, a psychological, and also a business standpoint? The one other thing that I would share with you is I think that, and we stress this a lot, is the idea of the individual and what they contribute to the business to instead focusing on teams. And that goes back to that portfolio of skills. So we think of it as, how can we make it not just contingent upon one individual from a succession planning, but how can we put a whole team and a team structure in front and behind any sort of succession-oriented event? And I think that's, by the way, kind of an interesting allegory about what's going on with our culture writ large here in the country.
Nathan Place: Yeah, absolutely. Absolutely. And you guys at Bluespring have framed these challenges in the past as a matter of choices. Specifically, you've said that advisors have seven choices to make about their future. Can you lay out for us what those choices are?
David Canter: Yeah, I'd be pleased to, and thank you for teeing that up, Nathan. And we think there's seven choices. Some could say they're six, they're eight, but if it's okay, I'll lay them out. And I think it's interesting because they're pros and cons to each of them, and it's on a sliding scale, if you will. So if you think about succession or you think about the future of your business, here's your first choice. Do absolutely nothing. Don't take any action. Now your business is not likely to continue growing, continue thriving, continue surviving. So succession embodies a future. I'll tell you, my father was a surgeon and he established a great medical practi, but he did not establish a succession plan. So at the end, the terminal value of his business was zero. Oh, wow. And I think you can find that, and that's sort of the nature of professional services business like advisory practices.
The second choice sell a minority interest, which can be great. It can help with growth capital, it can take some risk off the table for the entrepreneur. Problem is you're just sort of delaying the ultimate decision. The third choice is sell a majority interest and just have an economic or a capital partner. Again, that can be very useful, very helpful. But that brings us to the fourth choice, which is our choice, the entrepreneurial model, which is, you know, find a capital partner to help you solve some of the issues you're trying to address. But you get a whole bunch of support that we provide the support of a platform. The fifth choice is find a partner that, and you'll fully integrate into their systems. You'll lose your identity, your brand. You may even be told which clients to show up every day and serve. They'll tell you how to turn on your computer.
Now, I may be taking that to extremes, but that's the fully integrated model. The six choice is do it your own way, find a cross town merger, Nathan merges with Stewart's firm, and then you figure all these things out together. And then finally, the seventh choice is skip steps one through six and do an internal succession, really the old fashioned way. Now there are problems with that, and really the problems with that we can talk about, and that's in many respects why Bluespring was formed. In many cases, the successor isn't going to have the economics to pay the founder out for the value of the business, and most founders don't want to be paid out for the value of their hard-earned creation with their own cashflow. But it all boils down to the three things that we hear time and time again from founders. I want to make sure that my clients are taken care of and well looked after. I want to make sure that my associates have a place where they can grow, they can enhance their skills and succeed into the business. And then finally, they do want to get a fair economic value for the business, the enterprise that they've created. And that's, I think, what sort of underlies all of the seven choices. We have a <inaudible> on this, as you can imagine, for choice four, which is the entrepreneurial model.
Nathan Place: Right, of course. And also, you guys have your own personal experience with succession. As you've passed down the presidency of Bluespring from Stewart to David what lessons did you draw from that experience?
Stuart Silverman: Sure, I'll go back a little on this one because as I was listening to David, I'll, I love the seven choices because frankly, 10 and a half years ago, I was sitting in this seat, going through them myself. I'd built a business, it got to be fairly sizable. We got to a point where I was thinking about succession, I had turned 50. I was looking at it, and I went through that soul searching. The hard part is an emotional piece, the psychological piece that David alluded to, that's so relevant because your business is your baby. You spend more time at the office oftentimes than at home, sadly, because you're building this thing, and in the early stages, you were leveraging credit cards and having no cash flow to be able to hire and grow the thing. So by the time it gets to a certain size and scale, so much of it is dependent on you.
It's very, very hard emotionally to let go of your baby, or to give up that control, or to think that this world revolves around me. Yet we all know, particularly now, as I sit on this side of the table as an acquirer, that businesses are the most valuable when they're not dependent on any one person. When they're run by a team. When you could step away and it could keep running. New clients could keep coming in, existing clients could be serviced. Next, future generations would stick with the firm. So as we look at all of that, it all kind of comes together. And I think in a really, really interesting way when you kind of study the psychology. But you're right, what we do at Bluespring is, and what we just did, which I'm so excited about, is we walk the walk and we talk the talk.
I've known David for a number of years, had huge respect for him as a thought leader and someone who's influenced my career as I've listened to him speak and watched him across the industry. And when we were looking at what happens with Bluespring, we grew so fast and we're now at a shy of 30 firms. We needed to take this business to the next level, and I needed to think of it was my baby at first, but now we're a pretty large firm with a very large group of partners and associates, and we need to think more strategically. So we spent a lot of time talking and strategizing and thinking about what are our objectives? Are we philosophically and culturally aligned? We have to be very crisp on our objectives, our goals. We have spent a lot of time asking questions and getting to know each other, understanding your strengths and weaknesses. But if we're going to coach p advisors and firms on how to successfully transition their business and find what they want out of life and find that balance, then we had to live it ourselves. So for David and I, it's now month. We just finished month five of this transition, and it's been really great because I think now we're at a point where we can almost finish each other's sentences. The only thing I can't do is handle a guitar or sing he can. Other than that we're pretty aligned. So it's great. Well…
David Canter: I do…
Nathan Place: Well, I know David's going to play it out at the end, so we'll get a lesson in that later on. Sorry, go ahead. David, did you have something to add?
David Canter: No, I was just going to have a little fun. I was saying I follow Stuart Silverman's asset allocation advice guitars.
Nathan Place: Yeah, I can see that from your back wall.
Stuart Silverman: That's only a small piece of his portfolio, by the way.
Nathan Place: Oh, wow. Oh yeah. So there's more. Okay, great. Well, I love what you said there, Stuart, about the psychological and emotional challenges of succession planning. That was a major focus of the cover story I just did on succession planning just recently. Recently. So let's talk about how to deal with those challenges. So on the G one side, on the business owner side, what are some tips you might offer to a business owner on how to overcome some of those emotional and psychological challenges?
David Canter: I'll start, and obviously we both should share our perspective here but it, so it does start with your seven choices. It's really starts with what do you want the future of the business to be from a structural perspective? And I think that's important. And by the way, we should have said, it goes without saying that you can mix and match some of those changes together. The other thing I think that is important is to try to have a vision of what you want that succession to look like with team members. And you have to be very clear about what their kind of roles, responsibilities, and economic interests are going to embody. In some cases, you have associates that are going to be new owners of the business. In other cases you may have associates that or go are going to actually dilute their ownership in the business.
So I think transparency is very clear. And then I think it does come back, Nathan, to setting a clear idea of I don't want to say boundaries because that sounds a little sort of governance oriented, but have a clear path to understand what everyone is going to do from a roles and responsibilities perspective and decision rights. That can be the most difficult thing to understand. Who gets to decide what we're all collaborators. As a matter of fact at Bluespring, we have three things that we've been talking about that thematically that the theme of community and culture and collaboration. But at the end of the day, you have to have an operating model that takes into account decision making and propelling the business forward. So to sum it up, I would sort of put it in these buckets, clear purpose and vision about what the objectives are from a succession, and that's both economic and operational. Understanding those, the goals and desires of not just that G one, but the G2 or G or G two s and G three s, and then thirdly, sketching it down into an operating model. All easier said than done, and I know we're going to get into it in more as we talk.
Nathan Place: Sure, yeah. Stuart, did you have anything to add to that?
Stuart Silverman: Yeah, a lot of it's about communication too. Just being open, as David said, transparent, communicating efficiently, really listening and understanding. And as has gone through this a couple of times now, it's learning that it's okay to give up control. It's okay to be quiet and listen and learn and realize just because you built the business a certain way all these years, having a fresh set of eyes, a younger set of eyes, someone who brings another industry experience can be enlightening and can take the business to a whole different level. And again, I think some of us are control freaks as entrepreneurs, we sweated it out as we built it, but letting go and saying, I can learn, I can grow, but I've got to realize this can't be my baby anymore. It's a team approach, creates more value and also makes, I think your business lasts for generations to come.
Because as I talk to advisors, what they worry about is their legacy. And when you think about the legacy, their clients have become their friends, but they know that generation of clients. If you look at the typical advisor, they tend to work with people around their own age. When you broaden that and start saying, okay, let's look at the children of our clients and the grandchildren, and we want this business to last for generation to generation, and as a wealth management firm, we want to make sure we retain those assets. So it's great to bring in succession, it's great to let go, and it's really the communication piece, checking in with each other, not always talking about everything going on in the business, but talk about how you're communicating, how you're relating. Strangely enough, as you bring in a successor or a team, it's like a marriage. And the more you communicate, the more you understand each other, the more success you're going to have. And that means listen more than talk and really kind of think about what's best for the business and get your ego, keep your ego at the door.
Nathan Place: Yeah, that does sound like good advice for a marriage as well as business. Yeah. So on the G2 side, I love what both of you said about boundaries and being able to let go and letting go of that feeling that your business is your baby and you need to keep controlling every aspect of it. That's one of the things I've heard from my sources over and over again, that that's really the biggest psychological issue that comes up during successions. But the advice obviously to G one to a large extent is to learn to let go. But on the G2 side, if your G one person is not letting go, what advice might you have for them? How can they help that person let go a little bit?
David Canter: Yeah, if I could, I want to take a step back, just a half a step which I do think this is advice, and Stuart, Stuart touched on the control issue this business, and we talked about, this is a personal services business. This is a fiduciary business where the advisor, the is the principle, the owner of the business, and a lot of the value that they have enjoyed over the years from a emotional, personal and professional perspective is working with clients. The, there's one unifying principle I've seen in this business is that every advisor, I'm sure there are good days and bad days, but everyone wakes up because they love to serve clients, they love the relationships. And when you're thinking about running a business and succession, we often get embodied within being the identity. But one of my former leaders that I work with, a guy named Mike Durbin taught me the role of a leader is to create other leaders.
And that's the highest and best use and the highest sort of exalted place if you can create other leaders. So the advice that I would amplify to what Stuart shared is don't think of it as the succession of your role with your clients or your role running the business is your legacy, is creating other leaders. And I think that is a fundamental kind of organizing principle. Easier said than done. All of this is easier said and done, but that would be the advice that I would share. Think about creating other leaders and the legacy that you leave in that perspective.
Nathan Place: Right. Yeah. Okay. So then staying on that G2 side what other tips or advice might you guys offer the second generation in the succession?
Stuart Silverman: It's a great question because the G2 is in a really interesting position. If it's about they, they're taking over a business or taking over a role that someone spent years running in relationships that someone spent years building. So I think the best advice and the most successful transitions I've seen are, number one, to go back to what I said earlier, those two, the part, the G one and G two, the founder and successor are really communicating and checking in and talking to each other. But for the successor it's also about patience. It's unfortunately, we live in a world now where we've seen this with particularly millennials and the next generation where they want everything yesterday. And that's okay. I mean, that's because they're eager, they're ambitious, they're entrepreneurial, but sometimes a lot of these businesses took years and years to build. And a lot of the experiences from time around the sun, it's from learning.
So I think it's kind of respect the past, understand the culture and what's important to the founder, work together to hand the ball off, so to speak, work together and have a strategy with each client so that they see the number one, the successor is really believes in the founder. The founder believes in the successor. But that I think that the successor is respecting what's been done in the past and not trying to change everything radically and not trying to take over from the helm. They kind of have to a coordinated strategy because that's going to make the business more successful in the long, long run. It's going to make the clients and the employees feel better, but it's a really tight weave that we have to do to get that working, because there's a lot of ego, there's a lot of personalities, and there's a lot of patience that's required. And I think the best firms that I've seen do it, have done it with a lot of communication and mutual respect for each other. And that comes with again, listening and understanding.
David Canter: And if I may, Nathan, I, I'll just jump in with another parable, which is to the G2, Hey, don't be afraid to stretch your wings and show ownership, take ownership, and actually do the role and be a leader. So sometimes you're not going to do it right the first time, but that's okay. It's learning. And we shouldn't expect metaphysical certainty as to execution. And I'll just say the other thing I would say, and you're going to forge, please forgive me because I am going to bring music into this, think about the broader enterprise and the value of a long lasting enterprise. And I won't go too long into this, but I am a big fan of the Grateful Dead, and I really admire what the Grateful Dead have done with their successor bands after Jerry Garcia passed away. And Phil Lesh has stepped into the background. John Mayer is playing, and it's not about John Mayer, it's not about the other member, the legacy members, Bill Kreutzmann of the Grateful Dead. It's about how can we bring this enterprise to the next generation of clients, a.k.a. fans. And I think there's a remarkable parable in succession planning as evidenced by dead and company.
Nathan Place: Right. Yeah, absolutely. I mean, that actually leads into one of the questions we just got from our audience. I think this is a perfect example of what you're just talking about with Jerry Garcia versus John Mayer. And so on the other side, what this person called the very human side to succession planning is identity. A lot of business owners, including advisors, have their whole identity wrapped up in their business. How do you get past that when you're trying to pass down your business to somebody else?
Stuart Silverman: It's a great question and right on the money. And I know that question also talked about one advisor who ended up having committing suicide because when they left, because they felt they lost their identity. Not to be all negative here but it's a great question because so many people, their business is their baby, as I said, their identity's locked up in it. So we work very closely with all of our founders to say, let's talk about that next phase of what succession's going to look like. And what we've seen is an interesting trend in the industry, and at least within our group of companies, is that founders aren't necessarily leaving. They might be changing and evolving and saying, how can I find that balance? How can I provide value to the firm, but how can I also hand the ball off? But I have all this knowledge I can share with that next generation.
So we sit down with all the partners and in the businesses we acquire, we've had six, eight partners who have equity, and we've had two or three, but we sit down with them and try to understand each of their goals, what's really important to them, and try to structure a role so that it's not just we buy your business goodbye. In fact, what we're seeing is that 90 plus percent of the businesses that we acquire, the founders stay along, stay around long after their earn out. And I'm a perfect example. I'm 10 and a half years later, this is my baby. I love the industry. I'm a student of the industry. I'd go nuts if you told me to just go play golf all day. I love what I do. I love the people we work with, and I love the intellectual stimulation I get for it. And we've figured out a way that people like me can find our fit, can find our niche, can provide value to the firm, to do what we love, but also have a little balance and get out of the way so the next gen can take it and put it on steroids and take it to the next level. Sorry, David. I have to say that steroids come. Legal steroids.
Nathan Place: Okay. You want your business to grow. I think that's the message one way or another. Great. Yeah. Okay. And we've also got another question here, which I think is relevant to what you just talked about. So somebody says, I'm a lone wolf, I have no associates. How would you approach succession when the considerations are getting value for the business and finding an organization to take over int? So how does that lone wolf aspect change the equation?
David Canter: Yep. Yeah. Well, there's a couple things at play here. When we think about our approach to the market and our value proposition, we happen to be focused on ensembles. Ensembles where multiple, there's a team, and that's sort of our focus. However, this industry has all shapes and sizes. So we focus on, in a situation like that, as do others, you really probably, if you don't have a team that sits in and around, you have to probably affiliate with another team to have a lasting value to the business. Because at the end of the day, you know, need that team to serve the clients. And the ongoing service and growth of the clients is that's where the value, that's one of the main value drivers of the business, obviously the ability to grow the business. So you have to find a model where you can affiliate or merge into another business.
And there are many models that offer that. We do that at Bluespring as well, where we provide avenues and capital and platform services for what we call sub acquisitions or mergers. But I think that is probably the main choice. And it's never too early to start thinking about that. If you are a sole practitioner, and we know there are many folks that have that model out there, you know, have to figure out what your plan's going to be because you don't want to be, I don't think, the situation my father was in where you don't affect a plan for your future, and then there is no sort of exit value to the business.
Stuart Silverman: It's almost an interesting catch 22 that we see. I had a conversation with a firm yesterday who said, you're going to want to buy our firm. We are so profitable. And they went through all their financials, and that's what they were entirely focused on. When we started looking under the hood, we realized, as he and I spoke, a really wonderful business and a nice gentleman, but it was all dependent on him. He was the secret sauce of the business. And he said, well, if I sell my business, you got to run it just like I'm running it. But he's the only one who could run it. So we started talk and he was running it so lean and mean, and all he's been reading about in these magazine in our industry papers are, it's all about multiple of your earnings. Well, the fact is, he should be thinking about, and he was young enough that we started talking about grooming a successor, letting go, giving up control, realizing he wouldn't buy a business that someone else was running differently than him and think he could take it over the way he does it and change everybody.
He needs to be a little bit more adaptable, needs to think about the next generation needs to invest in people because that will make his business a bit more valuable. And sometimes that means taking a step sideways or backwards and a cut in your own compensation to invest in people. So the business is not dependent on you. And that's, again, the emotion comes into play because it's hard to give up control, but it's much more of value for you when you do do a transaction. And it's much better for your clients, for your employees, and for your legacy to know that you can do that. The other option is, David said, we do a lot of sub acquisitions and mergers, but even then, I would say, and this is hard to say to someone, you have a great business, but if you're going to merge with another business, you have to be amenable to changing the way you do things because they probably have a platform, and in the platform there might be case design, there might be portfolio management, there might be team, a team approach to the planning. And so they have to think through, look through that lens, and think about their business a little differently. Because again, in the long run, it's best for everybody. No one loses when you do that. But it does mean changing direction. It's taking a step to the side and then moving forward. And in the end, it can work best for everybody.
David Canter: And Nathan, if you'll allow me, I'd love to, as we say camp on to Stewart's comment, which is, I think a really important aspect of it, because we've been thinking about succession planning of, oh, you plan with your successor, but nothing changes about your business, the services and capabilities of your practice. Nothing changes necessarily about the other personnel in the business. And that frankly is why Bluespring was created, is the entrepreneurial model where we don't change any of the special sauces, Stuart said, or the aspects that relate to the client experience. When you are merging, if you're a sole practitioner into another business, another platform, there's likely to be a lot of change. There could be change in how the client experience is delivered. There could be change in terms of the capabilities you're expected to deliver. There could be change in terms of the fee structure. Even there could be change in terms of the technology that you use. There can be change in terms of the team members that you're now expected to work and collaborate with. So I think Stuart said it quite well, which is, if you're doing it all by yourself your own way, you have complete control. But there is a spectrum and you have to sort of prepare for that. So I think it's an excellent aspect to all of this to bring into the dialogue.
Stuart Silverman: And finally, we just to put it in real life terms, Nathan, we acquired nine firms last year, four of them where these kind of, I would want to call 'em lone wolves. They might have been two or three person kind of teams, but they merged with bigger firms and they were able to integrate. But there's a whole, again, psychology to it. These firms spend a lot of time dating and getting to know each other and say, are we culturally, philosophically are we aligned that way? Could we work together? And when we realized that, and again, we do a lot of that, we had four firms that did join that way, and we had five larger firms that became hubs and were able to acquire other firms. So you got to look and say, who am I? Which field should I play in? And what's best in the long run?
Nathan Place: Right. Yeah. And there's that dating and marriage analogy again, which seems to come up a lot actually, including with a lot of my sources for my story. One source said that a succession is a long courtship, you're getting to know this other person or this other business. I'd also like to talk about some of the businesses that you guys have worked with without naming names of course. Can you think of a recent time when a succession was on the rocks, when it was on the verge of falling apart, and you guys at Bluespring managed to put it back together?
David Canter: Well, I guess I'd first say that we're talking about in the wealth management rubric, the wealth management industry, but this issue exists in every business. In fact, I gave the music example, but just recently you saw Disney and Bob Iger, who had been the c e O of Disney who came back to take the reins from his successor. I think that was actually last month, if I'm not mistaken. So succession is an issue in small businesses, medium sized businesses, and large businesses alike. It's not hard to find examples like this and certainly there are, but I think it really goes back, and Stuart can share some of our observations across the industry. Transparency is so key you know, want to make sure that the successor has all the facts. And you mentioned dating marriage. I actually think it's more like pre-Cana, you date and you get married, but then the pre-Cana process actually has a set of questions that you go through with generally in the past it's been with some type of religious lector, but you know, could see it with a judge or a therapist.
But I think that's the thing, how can you really get transparency into all the aspects so that you're as prepared as possible? And you're asking a lot of questions. You're asking questions about, Hey, what's the true economic situation and capital stack of this business? I might be coming into, where does my equity fall into all of this? What is the operating model, the governance structure? What decision rights do I have? Tell me about some of the other team members. What is the 1, 3, 5 year plan look like for the business? Because as we talked about it, sure, it's emotional, it's psychological, but there's a business to run here, and you have to manage those emotional and psychological aspects. So transparency, transparency, transparency, I'd say. But think about some of those other elements and characteristics and realize it's hard. It's hard.
Nathan Place: Yeah. Transparency is one of the words that's come up the most as I've done my reporting on this.
Stuart Silverman: Yeah, sorry, go ahead. Real life examples that we've seen, I'm thinking of as you asked that question would be I think one of the most common mistakes or challenges is a founder or has his own, her own clients. And they've built deep, long-term relationships with these clients. And what we've seen is they have a hard time letting go of those relationships. And I know that sounds like, well, rela it's a relationship business, but the fact is, some of them I've seen hold on too long because they felt like, Hey, if I'm not here, these clients will leave. Well, as an acquirer, why would want a bit buy a business that's dependent on you being there? This business has to go on long after you retire. So we've worked with these founders to let go to message properly to their clients why this other partner or these other team is coming in and the fact that they're still involved, but there's a whole team and can break that dependency because with the dependency, it makes your business less valuable and there's a good chance those clients will leave.
But the founders seem to say, well, that's just because the successor can't do this. And what we say is that's really not true. It's really about communication. It's really about being upfront and it's really about the successor and the founder having a strategy meeting with clients together and the successor handing the ball off and showing that he or she has a lot of faith in if, or the founder handing the ball off to the successor, showing they have a lot of faith and slowly backing out of the relationship, still being involved, but backing out. So there is not that dependence. And so I can say I think of a few where we've had to really spend time on that, showing them that you can't just hold onto the relationships because again, that's not going to work. And a business is something that again, should not be dependent on that relationship.
It should be dependent on this business is going to go whether you're around or not. One of the things I learned very early is obviously recurring revenue businesses, which is what we have in this industry, are much more valuable than transactional businesses. But the other thing is, a business not dependent on any one person is a lot more valuable to everybody. So as a founder, if you can step back and take that approach and say, I'd like to make this business so it doesn't depend on me at all, if you go in that mindset and start looking at each piece of the business, I think you can create a really valuable business while ensuring that your legacy lives on and your clients and your employees are very well taken care of and happy.
Nathan Place: Right. Oh, go ahead David.
David Canter: Yeah, I just want to add one thing that is complimentary to what Stuart just shared, and I've also been looking at some of the questions. At the end of the day, when you're in a G one G two situation you know, can't oftentimes compel the G one to behave differently even though it may be in their best interest. And that can involve control issues, it can involve decision making, it can involve the amount of time they're engaged in the business. And I had the good fortune in my career to meet a gentleman by the name of Tim Haber, who is a professor at Babson College, who's done work throughout the industry with some of the most valuable and public businesses in the country. And so where I'm going with that is what Tim has done is he actually will be a consultant, a third party to help, I don't want to say mediate, but to try to help parties come to an agreement with some of these things.
So sometimes, I guess what I'm saying is you need outside help. Sometimes you need a third party, you need a coach to help you manage these issues because as we've all been saying there can be emotion, psychological issues, but you know, want to preserve and protect and enhance the value of the business. So my point, there are resources and we like to think of ourselves at Bluespring as a resource as well, either consulting with advisory firms that we may or may not move forward with or clearly with the firms that we're working with today.
Nathan Place: Alright. Okay, great. I think that we have time for maybe one or two more questions. I want to give the audience a chance to ask something. So one person writes in I am mid-career and setting up my own firm. If I'm interested in partnering with a solopreneur, I guess a solo entrepreneur how should I find and approach them?
David Canter: Well, I guess there certainly you can call us and we're happy to be a resource and help but there are other resources out there. And I would say that start with your network frankly, because I've never met a solo practitioner that doesn't have a network, whether in their community or more broadly. But the easy answer is give us a call. We're happy to be a resource. Going right back to where we started, we're a practice management consultancy that happens to be in the wealth management acquisition and platform business.
Nathan Place: Right. And I think we have room to squeeze in the last audience question. So someone writes in and says that there's a 76 year old founder at their business who's very resistant to new technology and sometimes gets excited about learning it, but then goes off and plays golf instead. So she asks what do you say to that 70 year old, 76 year old founder? What can G2 say to G one?
David Canter: Well, so here's the interesting thing here is that I don't think resistance to technology is necessarily endemic to any particular age. I remember in 19 94, 95 when I was forced to change from Ward Perfect to Windows 95 and I was outside my office building protesting with the sandwich board. But this goes back, I think to what we were talking about earlier, which is how is this impacting the business? And if this is something that the G one needs to do for efficiency if you can't control that, but maybe there's the opportunity to bring in other resources to help convince this individual. But that's probably a question best unpacked in a different setting.
Stuart Silverman: Yeah, the only other thing I'd say is as someone who's a lot, I think a lot of us in our generation, my generation at least have learned that our kids know a lot more about technology than we do, and we should open our mind and learn from them. Now, that doesn't mean they always have all the right answers and technology's not the solution to everything because this is still a relationship business. But I think we have to be open-minded to efficiencies. And I know when my computer freezes, the first thing I do is call my kids and I think a g G one, a founder, the first thing they should do is talk to their success or a G two s or their staff and say, how can we create efficiency? But at the same time, the G2 has to understand that change is hard as people get older and they have to be patient and they have to communicate, sorry, now I should have gone back. I should go from my psychology degree or
Nathan Place: It is a big part of finance, it's a big part of wealth management. I mean, behavioral finance is all about psychology, and that's a huge part of this business. Okay, great. We're just about out of time, but I wanted to give you guys a chance if before David plays us out if you'd like to offer any last words of wisdom or advice to our audience before we conclude.
Stuart Silverman: David, do you want to start?
David Canter: Sure, I'll start. You're not in it alone. There's help. And this is a situation whether you're G one, G2 or G three that lean on the ecosystem and the ecosystem is here to help you and you don't have to go it alone.
Stuart Silverman: Yeah, great advice. The other thing I would say is for my many advisors and firms that I meet, their biggest asset, you talk about asset allocation is their firm is their business. And if that's your, it's not just your baby now. It's your most valuable asset. So be able to step away, step back and take an objective look at your business. I mean, we've given a lot of advice here about how to successfully transition, but it involves making change. It involve, it involves looking through a different lens or bringing in someone else who can look through a different lens. And I think if you do that, this industry is the, I am, I'm honored to have been in this industry for 40 years. I think there is so much opportunity ahead of us. I think the bumps in the road right now are going to make all of us stronger.
And there's just so much on the outside of what we're going through with the economy that I think the bigger going to get, bigger the best are going to get better. And just keep an open mind and start looking outside of your own box. Sometimes we work so much in the business that we don't work on the business. So the big best advice I can say is work on the business, step back because it's a great business and it's a great asset, and there's a way that everybody wins. And that's what this is all about.
Nathan Place: What a wonderful note to end on. All right, well, I want to thank our panelists once again. Thank you so much David and Stewart for all your time and insights. And thank you to our audience for all your great questions and for tuning in today. I'll make a couple of shameless plugs. Now if you'd like to get some more information on succession planning, you can head to Bluespring wealth.com and you can also head to financial planning.com where you can read my succession planning story which is at the bottom of the homepage. So thank you guys so much again, and David, take it away.
David Canter: Well, thanks Nathan for a great event and as a bonus for the audience and the listeners – I hope it's a bonus – Nathan's letting me play a couple licks on my guitar. So hopefully this won't hit the cutting room floor, but here we go.
Nathan Place:
All right, guys. Excellent! All right, thanks so much David and Stewart. Okay, thanks everybody. Have a great day.
