Fidelity Institutional Wealth Services has introduced a program to help advisors create and formalize a succession plan.
The Boston-based custodian for registered investment advisors introduced the “Realizing the Value in Your Firm” program, which includes a series of workshops being conducted nationally to help advisors understand succession planning options, engage with advisors who have executed succession planning strategies and ultimately choose the succession “track” that is right for them.
According to the 2011 Fidelity RIA Benchmarking Study, 75% of advisors surveyed either don’t have succession plans for their businesses or have plans that are not ready to be implemented.
Fidelity uses a sequence of personal and group exercises including an innovative Track Selector Game to help advisors determine which of three succession strategies is most aligned with their vision: “internal transition,” “merge and stay involved” or “sell and move on.”
The workshops are complemented by personalized consulting from Fidelity and certain third-party succession consultants, as well as a toolkit that includes worksheets, planning templates and resources to help advisors create and implement their plans.
“We built this program around the insight that succession planning conversations need to start at a higher level,” said David E. Canter, executive vice president and head of Practice Management and Consulting at Fidelity Institutional Wealth Services. “Many advisors rush to determine their firm’s value or find a partner, but succession planning is more about shifting one’s mindset than making a transaction. This program helps advisors answer the question ‘what do I really want for the next phase of my practice and my life?’ We believe addressing this very significant element of succession planning will inspire advisors to take action and create more formalized plans.”
Fifty-four percent of investors who work with an advisor say that it is important that their advisor have a succession plan, according to Fidelity’s research. Sixty-six percent of RIAs would prefer to have an internal successor. Among RIAs who feel an internal successor is the best route, 29% have selected a successor.
“When succession planning is equated with retirement, it is not always a priority because many investment advisors are passionate about their practices and don’t see themselves transitioning out of the business. In fact, nearly half of RIAs report that they don’t plan to leave the profession or retire,” Canter said. “However, when advisors think about succession planning as a critical part of business continuity -- protecting the asset they have built and the clients that they serve -- it can and should move to the top of the list.”
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