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WASHINGTON – Advisors have heard plenty about the need for succession planning. But what can RIA principals and upper management expect when it’s time to actually manage a transition?

Tim Kochis, who presided over a major management transition when he retired as CEO of Aspiriant in 2012, addressed the topic head-on with consultant David DeVoe in a session aptly titled “So, when does Elvis actually leave the building? Successfully managing change at the top” at Schwab Impact.

Founding partners do eventually have to make a clean break, said Kochis, citing his own experience at Aspirant. He and Rob Francis, the firm’s current CEO, worked out a year-long transition that resulted in Kochis taking a six-month sabbatical from the firm after Francis took the reins.

The break needs to be “crisp” to avoid confusion, explained Kochis, now a special advisor to DeVoe & Co.
Employees, after all, are used to going to founders to get their marching orders.
DeVoe cited a case where an owner who handed over control to a junior partner continued to come into his firm’s office after the transition. By force of habit, employees came to the owner for guidance. Also by force of habit, the owner provided it — without walking the employees over to the new CEO’s office.

To be sure, principals who give up day-to-day control can continue to make contributions to their firm. They can — and often should —work with legacy clients, help cultivate prospects and provide valuable counsel based on their years of experience.

But DeVoe and Kochis stressed that the management transition should be carefully mapped out, and suggested four guidelines:

Commit to giving up control.
This may apply to specific areas or overall firm operations. But most importantly, Kochis stressed, “set a time frame.”

Communicate your plan clearly.
Having a plan isn’t enough, Kochis said: “Make sure your clients and staff know what it is.”

Create a process and a timeline.
The incoming management team will need to learn by trial and error. Carefully detail what you’re going to do during the transition — and what you’re not going to do afterwards.

Engage, monitor and refine.
It’s OK to make changes, even to lengthen transition timetables, if unforeseen events call for it. But whatever you do, Kochis emphasized, “Don’t renege!”

Above all, when the transition is completed, “It needs to very, very clear what the founder can and can’t do.”

To founders hoping to forgo a succession and keep control until the end, Kochis had a succinct warning: “If you want to die with your boots on, you will be lonely and poor.”

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RIAs Succession planning Client communications David Devoe Tim Kochis DeVoe & Company Practice Management Resource Center
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