After working for years on their own, many advisors struggle to find the right business continuity or succession partner another professional they can trust to assume stewardship of their clients, staff and even family if they become incapacitated, retire or die. Joining a branch can provide the benefit of a built-in back-up plan, in addition to the many economies of scale afforded by sharing overhead and resources.
In the independent channel, the term branch has a slightly different meaning than in a wirehouse or regional broker-dealer. An independent branch manager typically maintains an individual book of business. He or she may directly perform supervisory duties or may share those responsibilities with appropriately licensed staff.
The branch may create its own training and business development programs for advisors or, more typically, work in conjunction with the independent broker-dealer to provide those benefits. The advisors maintain independence in how they work with clients and in the investment solutions they provide, while letting the branch manager and staff shoulder much of the compliance and supervision activities.
Most independent broker-dealers view the advisor as the owner of his or her book of business. In a wirehouse, if an advisor becomes ill or disabled or dies, the client accounts are reassigned to one or more advisors by the broker-dealer. In the independent channel, you hand-pick the person who will serve your clients when you cant. You can usually choose from a pool of candidates who share similar investment philosophies. Within the same broker-dealer its easy to reassign clients, but within a branch access to client accounts is immediate, allowing for uninterrupted service.
While our industry has focused on the need for advisor succession planning in recent years, the greater risk to your practice is an unexpected disruption in your ability to work. While a succession plan typically assumes you will not return to run the practice; a continuity plan must also address the possibility that you will, in the case of a temporary yet lengthier disability.
A branch structure offers the assurance of a licensed professional ready to take care of your clients at a moments notice. You may also be counting on a son or daughter to be your successor but who might not have the education or experience to handle clients for several years yet; a branch not only provides continuity of client service, but also structure, support and training to help your son or daughter succeed.
Branches offer continuity agreements that come in numerous forms. In one Securities America branch, the manager has established an auto-continuity agreement, which advisors may adopt if they choose, providing payment for the advisors book to his or her heirs if the advisor dies.
In every case, a written continuity agreement stands ready for that critical moment. It may seem obvious that the other advisors in your group or branch will have your back and do whats right in your hour of need. Unfortunately, the industry has no shortage of stories about advisors squabbling over compensation when one has taken care of the others clients during an illness or disability. As the saying goes, Good fences make good neighbors. Having written plans and agreements in place ensures your family and your clients are taken care of the way you want when you arent able to make those decisions yourself.
When considering joining a branch versus operating solo, advisors often focus on the hard dollar efficiencies of shared office space, utilities, furniture, equipment and staff. Some advisors also place value on the camaraderie and shared knowledge a branch structure provides. Few consider the important benefit of having one or more nearby colleagues as continuity partners a safety net arguably more important than a succession partner. Whether you formally join a branch or you enter an agreement that just covers the unexpected, get your continuity plan in writing today.
Chris Kirby is a senior business consultant for Securities America's Practice Management Group and serves as a consultant/coach for the firms Business Consulting Service, helping advisors manage a more efficient, profitable and satisfying practice.