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Preparing next-gen planners for succession starts with this phrase

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When succession planning is on the horizon, how does the owner of a planning firm transfer the mantle of trust to their future successor? Financial advice, after all, is very personal. We know our clients' goals, financial successes and mistakes, family joys and upheavals — and sometimes even the dark skeletons in their closets. The relationship takes time to build and years of showing up when the client needs help.

Firm owners should be ready to throw their proteges in the pool, and as they gain confidence and experience, requiring them to swim in the deep end. Here's how to go about it:

There are three parts to an advisor’s development — acquiring technical knowledge, healthy business and time management skills, and excellent communication skills. Each component is part book learning and part hands-on experience.

Depending on the motivation of the younger advisor, the book learning can occur very quickly. That can result in a mismatch about what that advisor knows in theory, versus having the experience to know how to apply that knowledge in practice. The key to such development is to set ground rules and create a culture of trust between the senior advisor and future successors. These ground rules minimize mistakes while giving the young advisors confidence to step outside their comfort zones.

The first ground rule is learning to confidently embrace saying, “I don’t know.” Toxic firm cultures deride people for saying they don’t know something or for making mistakes. This leads to bloviated bluffing with clients and the tendency to hide or lie about errors. Our rule? If you don’t know something, look it up, and if you still aren’t 100% crystal clear, ask.

Stress to the young advisor that advisor-client trust develops when everyone leaves ego at the door and that questions and mistakes are valued as an opportunity to create excellence. In our firm, if you are asked a question by a co-worker and you don’t know the answer, say, “I don’t know”; If you are asked a question by a client and you don’t know the answer, say, “I don’t know, but I will find out” — and make sure you get back to the client with a resolution to their quandary.

The second ground rule is to practice extreme preparedness.

Free rein to say “I don’t know” can never be a crutch for lack of preparation. Any new task or client meeting can naturally provoke anxiety, but being unprepared will significantly up your “I don’t know” count — and may cause you to look anxious and sweaty in the process. This will not engender client confidence.

Our rule: Be prepared. Know the client’s agenda, know your agenda and have the information and documents ready to reduce curveballs that will throw you off balance.

When to throw the young advisor in the pool

In medical school, you first learn by doing all the mundane, routine grunt work — looking up test results, drawing blood, writing patient notes and entering doctor’s orders. Yet that grunt work teaches valuable lessons. You have to learn how to crawl before you can walk. Likewise, once an advisor understands the basics, the next step is to let them become proficient at one thing at a time.

Our next generation advisor, Joey Loss, started out by performing the grunt work of projections, estate planning, 401(k) administration and tax planning. Then, within months of coming on board, he immersed himself in insurance planning, while continuing to help out with more rote tasks. Loss learned the particulars of each client’s insurance situation, talked with clients to get their needed input, helped shop for appropriate coverage and put together the insurance reviews. After a period of oversight, he knew the material as well as Carrie Jones, our senior advisor who previously had overseen insurance planning. Both now know the insurance situations for all of our clients much better than I ever hoped to — and our clients love the depth of the bench we’ve developed.

Time management and communication skills are taught concomitantly with technical skills. For time management, we spend an hour each week as a team reviewing completed and upcoming work and how we stand on workflow for the year. Newer team members get into the groove and understand our time-management expectations.

One of my roles in medical academia was to teach the “bedside manner” class, so I have particular interest in the art of having productive conversations on difficult topics. When a client comes in to discuss a challenging subject, all three planners are present. Through this process, Loss and Jones have picked up techniques I previously taught medical residents, such as appreciative inquiry, reflective empathy, validation and clarifying and summarizing the conversation.

Since I love to tackle tough conversations, it’s been challenging for me to shut up and let Loss and Jones handle them. Post-meeting, we provide each other with feedback. And yes, they critique me, too!

Swimming in the deep end

Over the past year, Loss became the expert in insurance planning and college planning. He communicates directly with clients from start to finish on these topics. Clients understand that we wouldn’t let him loose without being confident that he knows what he is doing. It is a joy for me when clients call and ask for him directly. The mantle of trust on these subjects has been transferred.

Now, Joey is taking deeper dives on estate planning, investment education, projections and tax planning. Jones completes the more complicated estate planning and projections and has mostly taken insurance back from Loss so he can concentrate on these other projects. I do the complex tax planning. Our goal is to rotate the cycles so we are all cross-trained on each of these client topics, gradually giving Joey the more complicated cases.

The deep end on communication has also evolved. We are all still involved in most of our meetings because we cover many different topics. However, we may tag-team the meeting so we all have alone time with the client. If it is a meeting on a single topic, the person in charge meets with the client alone, which now means Loss has client meetings without anyone else present.

My own deep end of the pool as far as succession planning has been relinquishing control once our objectives have been achieved. Thankfully, our process and desire for success for us and the clients has turned what could be a dreadful journey into a fun adventure.

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