When Ronald Blue & Co., one of the country's largest RIAs, was building its internal succession plan, the company’s top executive hit upon a necessary precondition.
“You have to have a mission that’s compelling enough to make sure that your clients are taken care of after you are gone,” said
That mandate leads to a fundamentally different company culture than one driven by star planners who readily take clients away from a firm when they depart, Crossen said. And this typs of culture leads to firms where each partner’s income may be less than he or she could make at a competitor in which planners’ personalities dominate the culture.
This is just one reason, Crossen and leaders of other top independent RIAs say, that many RIAs won’t do it. “It’s a problem in the RIA space because it does require reinvestment, which is contrary to the way people think because it requires present income,” he said. ““We’ve seen very few other companies do this.”
Cross said Ronald Blue’s succession model is based on the following components:
“I think the industry as a whole is kind of at a crisis in trying to figure out [succession],” Crossen said. Giving priority to the firm's mission over individual planners, he thinks, is the way to start. “Until they get past that hurdle, then it’s going to be very difficult to do that.”
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