Although some business experts see danger in retiring heads of companies naming family members to succeed them, there are plenty of advisers who say it works at their firms.

That includes Karen Altfest, a CFP and principal adviser and executive vice president of client relations at Altfest Personal Wealth Management in New York, and Anthony Lofaso, a CFP and head of Palm Planning Group in West Palm Beach, Florida.

Altfest and her husband Lew, who is a CFP and the chief executive, chief investment officer and a principal adviser of the firm that he founded in 1983, are grooming their son Andrew, 36, to take over their practice.

“He has been in the business since college and interned elsewhere before joining us,” Karen Altfest says.

“He’s a major leader of the firm now,” she says. “He’s the kind of person who has the right stuff.”

The issues in choosing a relative to take over a firm are no different than the ones faced in selecting an outsider, Karen Altfest says.

It is important to find someone with top qualifications who has significant experience and understands client issues.

Karen Altfest does see one way in which it is different for relatives, however.

“I hear from heirs that they have to work twice as hard to prove themselves,” she says. “It’s not a smooth ride, and perceptions can be difficult.”

Likewise, Lofaso has the same confidence in his son, Alejandro, 40.

“Everyone is excited about my son, because of what he can pass on,” Anthony Lofaso says. “I’m comfortable that he will have the same care for clients as I do.”

It is a plus that his son joined the firm after working as a teacher for 13 years, Anthony Lofaso says.

“He has work experience. Someone straight out of college would have a very difficult time,” Anthony Lofaso says.

“The success rate in our business is only 10%,” he says.

To be sure, training a son or daughter to take over can be a bit more complicated than training an outsider.

“With a child, there’s more of a challenge, because there’s a family dynamic as well as a business dynamic,” Anthony Lofaso says.

But he also finds that helpful.

“It motivates me to want to grow the business to leave a legacy for him,” says Lofaso, who is 66 and plans to work for another five years or so.

Dan Weil’s work has appeared in The New York Times, The Wall Street Journal, Bloomberg, Institutional Investor and Tennis magazine.

This story is part of a 30-30 series on smarter succession planning.

Register or login for access to this item and much more

All Financial Planning content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access

Dan Weil

Dan Weil’s work has appeared in The New York Times, The Wall Street Journal, Bloomberg, Institutional Investor and Tennis magazine.