When Ronald Blue & Co., one of the country's largest RIAs, was building its internal succession plan, the company’s top executive hit upon a necessary precondition.

“You have to have a mission that’s compelling enough to make sure that your clients are taken care of after you are gone,” said Russ Crosson, the Atlanta-based firm's president and CEO. “The firm is bigger than any one individual.”

That mandate leads to a fundamentally different company culture than one driven by star planners who readily take clients away from a firm when they depart, Crosson said. And this typs of culture leads to firms where each partner’s income may be less than he or she could make at a competitor in which planners’ personalities dominate the culture.

This is just one reason, Crosson and leaders of other top independent RIAs say, that many RIAs won’t do it. “It’s a problem in the RIA space because it does require reinvestment, which is contrary to the way people think because it requires present income,” he said. ““We’ve seen very few other companies do this.”

Crosson said Ronald Blue’s succession model is based on the following components:

  1. The firm is a limited liability company and owned by partners.
  2. On a regular basis, it holds a CEO roundtable at the company’s headquarters in Atlanta to train advisors in the qualities it needs for its next generation of leaders. Over the course of five two-day sessions in a six-month period, these planners learn about business development, client service and financial aspects of running the business, among other topics.
  3. Planners with eight to 10 years of time are given the opportunity to buy into the company, gradually transferring the firm’s ownership from older to younger partners.
  4. All of the firm’s 85 advisors around the country have bought into the mission of putting the company before themselves, according to Crosson. “They know that their job is not only doing their job well but also to replace themselves,” he says.

“I think the industry as a whole is kind of at a crisis in trying to figure out [succession],” Crosson said. Giving priority to the firm's mission over individual planners, he thinks,   is the way to start. “Until they get past that hurdle, then it’s going to be very difficult to do that.”

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