For RIAs who want to ensure clients that their firm will endure to serve their children and grandchildren, a robust internal succession plan is critical.

One way to do that is to eliminate outside ownership conflicts, argues the founder and CEO of one leading RIA firm.

“The challenge for our industry is what is your durable business model?” says Rob Francais, founder and CEO of Aspiriant in Los Angeles, which ranked No. 3 on Financial Planning's list of top RIA firms. “How are you going to remain permanently independent?”

Unlike other firms that are party or wholly owned by banks, private equity firms or law firms, Francais -- whose firm manages $6.8 billion in client assets -- makes sure that future generations of Aspiriant leaders will own the company.

“We sold 8.5% of our company last year,” he says, “but that doesn’t make the paper, because we are selling it to younger shareholders for fair market value.”

When the firm completes regular transfers of this sort, it tells its clients. And, in turn, these clients let Aspiriant know they are happy to hear it, he says. “I can’t tell you how many clients emailed us and said, Congratulations,” Francais says. He believes this internal succession plan gives clients confidence that an outside owner won’t swoop in and fundamentally alter the firm’s culture or sell to another unknown quantity.

“If you are owned by a private equity firm that expects a certain return on its investment, then there’s a competing objective” that conflicts with the firm’s interest in serving both its clients and its own advisors well, Francais says. “If you educate clients [about private equity] and peeled back the onion they would say, ‘I don’t want you to be private equity owned.’”

The costs of internal succession reduce the firm’s margins, he says. But Aspiriant made a very conscious choice that this cost was lower than running the higher risk of losing control of the company or diluting the purity of its mission, he adds.

Simply ensuring that your firm isn’t being forced to sell certain products doesn’t go far enough, Francais believes.

“That’s a one-dimensional way of thinking about it,” according to Francais. “You want to create a decision-making environment for the client that is uninfluenced by external forces. You want to be independent of anything. We would assert that is a critical value proposition for clients.”