Planning Early for Business Succession

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I recently ran across a couple of statistics about how financial advisers treat their own business—and where they place the business in their personal planning—that I find to be troubling and indeed somewhat shocking. After all, the profession itself was founded on the core principles of planning: setting goals and building plans to reach those goals.

According to the 2008 FPA-Cerulli study:

  •  More than half of respondents were over 51 years of age (people who should be seriously thinking about their own “retirement”).
  • Nearly half of respondents estimated the value of their business would be greater than $1 million—presumably one of their largest (if not the largest) financial assets to support them in retirement.
  • Half of respondents didn’t have a written plan to manage the factors that can increase the market value of their (potentially) largest financial asset prior to their retirement date.

The old folk saying about the cobbler’s children having no shoes comes to mind when I think about this situation.

Based on my inquiries and discussions within the financial services community, the most common answer to the question of, “Why don’t you have a business ownership transition plan?” is that people see it as “important, but not urgent.” In other words they’re saying, “I’m too busy running a business now. I’ll think about this stuff later.” 

Too many of my clients are evidence of this failure to plan, coming to my company when they’re at the door of the emergency room, so to speak. Unfortunately, no one can turn back the hands of time—and time is the critical element in planning, isn’t it? As it is in building a retirement plan or a college funding plan, the power of time to facilitate the intention to change is non-replaceable. “Use it or lose it” really is true, whether it’s building investment portfolio value or building the open market business value of your company or practice.

Isn’t it about time that we become better cobblers and give our kids some good shoes?

Sam Hull, CFP®, CPCC, ACC, RLP
Partner
Whitewater Transitions LLC
Arundel, Maine

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