Succession planning in a financial advisory firm is vital to long- term success and growth, according to Richard C. Salmen, a certified financial planner and senior vice president and senior advisor of GTrust Financial Partners in Overland Park, Kan.
“It reminds me of what I was told when I was a young second lieutenant in the army. You can’t move on to your next job until you’ve found your replacement,” he said. “My firm cannot continue to grow and prosper and I can’t continue to grow in my role” without other people to take on important jobs in the business.
GTrust has over $400 million in assets under management and serves clients in 27 states.
When Salmen first started as an independent financial advisor he “did everything.” Now he has three business partners, 27 employees and five different offices – partly due to staff members that are able to handle the needs of smaller clients “so that I can move on to new and more profitable clients without leaving those smaller clients behind.”
He says he believes in “measured growth as much as exponential,” without letting the service to current clients suffer in the pursuit of new ones.
Salmen said his firm’s purpose in succession planning is not just about eventual retirement for the principals, but in developing the role he and the other partners can take in growing the business. For Salmen, who is nearly 48, “the desire to retire, that’s not a goal. I get paid to do what I love to do.”
He pointed out that his firm has two people that are over 70 and several in their 60s. “That’s the beauty of this business – age equates to wisdom.”
The goal of succession planning is not to replace people, specifically, but to allow each member of the team to develop in ways that is best for the company.
Salmen said that he has met principals of financial advisory firms – and other small businesses -- who assume that when the time comes to retire they will be able to sell the company and make “a ton of money.” However, all too often that is not the case, and businesses that do not have a succession plan in place can end up settling for a lot less money than they had hoped.
He believes a more practical long-term retirement strategy is to build a business that is strong enough for the founders and principals to continue to be involved as long as they desire without being vital for all of the day-to-day operations. And the key to that, he says, is developing strong leaders internally.
“I hire for two things,” he said. “Attitude and intelligence. I can train for everything else. But if you don’t have the fundamental intelligence to do the job and you don’t have the kind of attitude I can use in my firm then you won’t be successful.”
Salmen points out that many of his most trusted employers joined his firm without any specific background in financial planning. He has an employee who spent 18 years in the printing business, and another with a degree in horticulture. And perhaps most notably, there is Samantha J. Kopek, who began at the firm as a receptionist and is now vice president and senior advisor.
GTrust, throughout its history, has made a point “to bring people in at the entry level and bring them along.” Salmen says can pinpoint people already in the business structure who have a future on the advisory team, and part of his job is to help them get there.
One of the ways GTrust achieves this is by using “ a very structured leadership system in running our company,” he said, which includes a two-to-three day company retreat to discuss the firm and its goals.
The company tries to include its employees in developing a shared vision and a strategy to achieving that vision, as well as ways to measure the results.
He also conducts formal reviews for employees three times a year. When this process was first instituted a few years ago “it seemed like a scary thing” but now it provides more regular opportunities to assess employees and help them achieve their goals.
“I’m not a big believer in creating work just to have work,” he stressed, but the leadership training, company retreats and regular employee reviews are things he believes are key to the development of the firm’s staff and it’s overall success. “We’re doing it because it works and because it adds value.
Additionally, he feels that a strong sense of shared vision also helps GTrust recruit the right employees to grow and develop within the company. “You can’t have a compelling picture for someone to come in and join you if you don’t know where you are going.”