For many advisors, succession planning has become a hot topic. For 70-year-old Harold Evensky, widely considered one of the grandfathers of financial planning, it's a personal one.

Financial advisors have increasingly realized that they've been subpar in planning how to pass on the reins of their business. More than two-thirds of advisors (68%) have no formal succession plan for their businesses and among those who do, the plans are vague, according to a survey released earlier this year by SEI. More than a third of advisors (39%) with a succession plan admit they’re not sure to whom they ultimately transition their businesses.

Succession planning has been on Evensky's mind for about eight years, he said at a meeting with Financial Planning editors. His priority: securing the future of Evensky & Katz, the wealth management firm he founded with his wife, Texas Tech associate professor (and Financial Planning columnist) Deena Katz. "To help with the transfer of the business, we ultimately settled on Fiduciary Network in Dallas, which provides funding for our next-generation advisors to buy into," Evensky explained, wearing his signature red bowtie as well as a new gold earring in his left ear.


Fiduciary Network made its very first investment in the firm in January 2007; it's now a limited partner in Evensky & Katz, with a 35% stake. (Evensky said the firm was valued at roughly six times EBITDA.) One key element of the relationship: loans that let the firm's “next generation” advisors buy an ownership stake in the company, encouraging them to stick around to expand the business. Fiduciary Network, meanwhile, gets to participate and profit from the firm's growth.

"Our attraction to Fiduciary Network was their focus on the long term," Evensky said. How does he define "long term"? "Forever," he replied.

Locking down a long-term plan doesn't mean Evensky is ready to hand over the keys completely. "We would have completed the transition at the end of last year, but I have no desire to be out of the business right now," he said. "I want to keep my skin in the game for a minimum of five years."


In the meantime, developing younger advisors has had another payoff as well: allowing the firm to bring on younger clients. "We need to approach Gen Y with their own," he said.

Evensky's son, David, who is currently on the firm's management team (and said he will continue to be once his father retires), told Financial Planning that the firm's future has been on his mind as well. "As financial planners, we need to take our own advice and use strategic planning to help maximize our business," he said. "How could we not plan for the future of our company like we counsel our small business and entrepreneur clients to do for their companies?"

Since 2008, the firm has grown 15-20% per year, he said, aided by the partnership with Fiduciary Network. "By getting outside funding, [we] enabled the succession to be financially possible for the next generation," he explained. "Proper succession helps turn founder-centric advisory firms from a practice into a business that will serve our clients for generations to come, while inherently maintaining the culture and expertise that got us here."

“I don't see my Dad retiring any time soon," he added. "He still works up to 20 hours on weekends. But when he does, I'll be ready to continue to help manage the business." 

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