May-December pairings may provoke the occasional snide look —
For older advisors, bringing on new talent helps pave the way for a succession plan that protects existing clients while creating a payout for the founding partner. Indeed, even if younger planners don’t eventually become equity partners, their presence can help the founder show potential buyers that they will be getting a thriving standalone business, not just a client list.
Another attraction of young blood is that they are more likely to bring in clients their own age — which again can boost a firm’s value in the event of a deal. “December guys’ clients are all Decembers, so all a buyer is doing is picking up clients in the consumption phase,” says
In theory, at least, these couplings have something to offer younger advisors as well: an established client base, an experienced mentor and the opportunity to leapfrog past the startup phase of a new company.
Yet as with most fairy tale romances, such connections take more work than simply waiting for Prince Charming. And the challenge can be particularly tough at solo or small boomer-run firms. “I think it’s hard for somebody in their 20s to pair up with Decembers because these are people who are trying to build their valuable skill sets,” says
FEW POTENTIAL PARTNERS
The dynamics of the industry’s succession planning crisis owe plenty to baby boomer demographics, but the recent stock market bust and boom played a role, as well. Advisors tend to neglect succession planning during a crisis, as they did during the financial meltdown. But industry matchmakers say the bull market made business almost too good. “They’re not motivated to sell now because they’re enjoying what they’re doing,” says
The problem is that when advisors do get around to selling, demographics are against them. Some 66% of advisors are older than 50; just 3% are under 30. Jinks says: “We’re seeing a shortage on the lower end of the spectrum.”
That’s one reason that the matchmakers caution advisors not to put off “dating” younger advisors. Nesvold remembers that 15 years ago, 60-somethings could get away with putting off a succession plan until a few years before retirement. No more. She now counsels clients to have a “10-year runway” to train younger partners.
Many advisors put things off until a deal is forced upon them. Often, Jinks says, he sees 65-year-olds merging with 58-year-olds, co-branding for a short time — maybe three months to three years — and then transitioning out of the business over several years. Often, these advisors end up merging with someone similar to themselves — gaining neither a long-term successor nor a way to cash out their equity.
SPOTTING INTERN TALENT
Some advisors have gotten help — with either outright matchmaking or help training a successor — from their independent broker-dealer or custodian.
Plummer started out as an intern with Rigsby while still in college; that summer gig turned into not only a job but also a likely partnership. “Kelsey was a gift from God,” Rigsby recalls.
Raymond James’ Advisor Mastery Program — in effect, a 2?½-year apprenticeship — helped Rigsby bring Plummer on; the firm helped offset the costs of training, sending her to the home office in
After the program is complete this July, when Plummer sits for her CFP exam, she will get an ownership stake in the practice. The plan is for the stake to increase gradually, with Plummer taking over while Rigsby is still there. The older woman has set a 10- to 15-year glide path to retirement: At the end, Plummer will be able to buy out the remaining share of the practice she does not own, or keep Rigsby on to supervise or do compliance while slowly buying her out.
For now, everyone is happy. Plummer is stepping into investment selection, leaving Rigsby more time for big-picture planning, landing new clients and coaching her daughter’s varsity tennis team. Clients are pleased, as well. “They’re happy to see someone working with Pam whom they’re comfortable with, and then [know that] I’ll be there for the rest of their lives,” Plummer says. “More clients than I thought have been appreciative of that.”
Two years later, there was a change: Roskelley’s family firm undertook a merger, and when the ensuing culture clash left the younger Roskelley unemployed, he took Jackson up on his offer.
That was eight years ago. Since then, Roskelley has moved from being an employee to a shareholder, and is now president and director of financial planning for the firm, which has more than
Jackson says the plan has worked “beautifully over the years” in part because he treated Roskelley as an equal partner “from the get-go. He knew his input made a big difference. It always worked because we treated each other with respect.”
The pair’s original plan called for Jackson to retire by 2010, but the financial crisis of 2008 derailed that. Now the transfer is scheduled to be completed in 2017. As of early April, Roskelley was on track to become a 50% owner by May?1, and will become the majority owner upon Jackson’s retirement.
“The decision for me was happenstance, but it turned out to be the best career decision I could ever make — partnering with an older advisor,” Roskelley says. “There are not a lot of people with the wealth that need our service at [my age],” he adds. “At Bob’s demographic, there’s a wealth of people who need wealth management and financial planning.”
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