Succession planning examined in April’s Advisor’s Edge

(April 14, 2005) It’s pretty hard to take someone’s advice when they don’t follow it themselves. Have you ever had a doctor tell you to lose weight, when they were, shall we say, a little on the stout side?

One of the prime clients advisors seek is the small business owner, who invariably needs help structuring a plan of succession. But what about the advisor? Have you taken your own advice and plotted an exit strategy?

“In the April issue, our cover story looks at succession planning for advisors,” says Deanne Gage, managing editor of Advisor’s Edge. “Obviously succession planning is a huge issue for many advisors’ clients, but often they don’t consider their own plight.”

According to research by Advisor’s Edge, the average age of financial advisors is 47. For anyone hoping to retire early, the clock is ticking. Advocis is already expressing some concern that there may not be enough young advisors to take over the current operations.

“The story looks at three different advisors who either have, or will be exiting the business in the next few years,” says Gage. “It gives readers a really complete picture of the issues they need to look at with succession planning.”

Advisors owe it to their clients to have a succession plan in place. A well thought-out transition will provide clients with comfort and continuity when you, their trusted advisor, decide to retire.

Another duty which has attracted attention lately is responsibility for product offerings. In his editorial, executive editor and associate publisher Darin Diehl writes about offloading due diligence.

In the wake of the Portus investigation, Diehl warns that clients may hold a grudge against the advisor who refers them to such a product, even without a recommendation.

“A lot of advisors think this doesn’t affect them, because they didn’t recommend Portus to their clients,” says Gage. “Something like this could certainly happen with another company and Darin puts this into perspective. “What do advisors need to learn from this situation? Maybe they need to look at their due diligence process for certain products.”

The magazine includes a Top Performers supplement, profiling movers and shakers in the industry, including The Harbour Group, a four man team at RBC Dominion Securities in Toronto which manages over $1.7 billion in assets.

“We also have a husband and wife team in Halifax with Scotia Macleod, who have a very detailed process that’s very specific,” says Gage. “They will not take you on as a client unless you commit to this process. If they can’t do a financial wealth plan for you, then you’re not going to be a client of theirs.”

Also in this month’s Advisor’s Edge, Jamie Golombek offers insights on what raises the red flag for the Canada Revenue Agency. Golombek identifies 10 items on your client’s tax filing (or your own) which could lead to an audit.

(04/14/05)