Clients should feel connected to their advisers, but sometimes too strong an attachment to a single individual can create problems, especially around succession issues.
If a client is comfortable only with just one adviser, what happens when that person leaves the firm or retires?
For most advisory firms, the answer is to wean clients off a dependence on just one adviser by “training” them to work with a team or many different members of a firm.
As the founding partner of Redondo Beach, California-based Navigoe, CFP Scott Leonard says that he has a term for the team strategy he employs.
He aims to make himself “intentionally irrelevant” to day-to-day operations.
“Everything you’re doing needs to be about a team as opposed to an individual,” Leonard says.
That goes for owners, who may be trying to make strategic decisions for the firm such as whether to retire or sell, as well as for advisers, managers and other employees.
“A relationship that becomes fixated too much on one person gives that individual too much leverage,” Leonard says, and it can also make their job more difficult, as clients demand attention from only that one person.
Leonard makes sure that at least two advisers from a team are in on each client meeting, on a rotating basis, so that over the course of a year, most clients have met at least once with every team member. Also, while each client has just one email address to use, anyone on the team can answer, another way of acclimating clients to deal with more than one person.
The benefits will appear long before it comes time to sell the practice in terms of efficiency and better client service, Leonard says.
“Having a business that is sellable in any given second is a better business,” he says. “Anything that makes your business more valuable for a seller will make your business more valuable in the present.”
Still, if clients are used to dealing with only one adviser, it can be difficult to get them to make the initial change, says Billy Lanter, a CFP and fiduciary investment adviser at Unified Trust in Lexington, Kentucky.
Succession planning should ideally begin three to five years before a target retirement date, he says.
Advisers need to show clients that there will be a continuity of culture, Lanter says.
“Clients need to know, and perhaps more importantly, they need to see, that their new adviser holds the same principles that attracted them to the firm in the first place,” he says. “The more continuity clients can see, the better the odds of a successful transition.”
Advisers should do everything they can to make sure that any changes are seamless, Lanter says.
When introducing a client to a new adviser, make sure that the adviser can demonstrate their understanding of the client at the first meeting and that there is no sense of “starting over” with a new person.
“If clients feel they’re having to start over anyway, they could start looking around,” Lanter says.
This story is part of a 30-30 series on smarter succession planning.
