Preparing for the Succession of Your Business, with John Novachis

When it comes to succession planning, Advisors must consider a many things - their clients, staff, family, and themselves. The anxiety of ensuring the welfare of their business as a whole can lead to sleepless nights. In this episode of Turning the Page podcast, Chris Reynolds and John Novachis, EVP Advisor Growth and Succession, IPC discuss everything from what is required for a strong exit plan to Chris's personal experience of selling his business multiple times, highlighting the recurring questions every entrepreneur faces:

• How to get full value for the business?
• Ensuring clients receive the same level of care.
• Taking care of loyal staff.
• Extending the business legacy.
  
  

The Succession Planning Landscape

There's a huge transfer of wealth and an industry shift underway - the baby boomer generation - who have built successful businesses - are looking to retire, but, there's a lack of advisors who are able to buy. 

The challenge for younger Advisors: lack of required capital and high cost of entry into the wealth managements space. This creates a gap between retiring senior advisors and the lack of new entrants to fill their shoes. He estimates that $400 billion of assets managed by advisors will reach retirement age in the next three to five years, underscoring the urgency of effective succession planning.

Key Concerns in Succession Planning

The primary concerns that entrepreneurial advisors face when planning their succession:

1. Client Care: Ensuring that whoever takes over will provide the same level of care and maintain the strong relationships built over decades.
2. Staff Care: Taking care of the team members who have contributed to the business's success, including assistants, junior associates, and family members involved in the business.
3. Economic Fairness: Receiving a fair value for the business, with transparent valuation, reasonable payment terms, and tax-favourable conditions.
4. Emotional Challenges: Carrying on the legacy and finding the right person to carry on continuity of care that has taken decades to build.
   

Succession Planning Options

As a buyer there are multiple options available to you when it comes to succeeding your business:

1. Peer-to-Peer Transition: Senior advisors find a peer, often younger, to take over the business.
2. Junior Associate Model: Bringing in a junior associate or next-generation advisor to gradually take over.
3. Strategic Buyer Option: Institutions like IPC acquire the business, providing a corporate structure with dedicated relationship managers and comprehensive support.

Emerging Solutions

The Pinnacle program at IPC offers innovative solutions for Advisors who want to continue working but reduce their administrative burdens. The Pinnacle Growth Program allows advisors to monetize their business, delegate operational tasks to IPC, and focus on client relationships while receiving guaranteed compensation and rewards for growth.

Another emerging solution is the Pinnacle Optimizer Model, where advisors can choose to work with a select group of clients and monetize the rest of their business. This model provides flexibility and allows advisors to maintain work-life balance while focusing on their preferred clients.

Enhancing Business Value

To maximize the value of their business, Advisors should ensure their client experience is consistent, repeatable, and high-quality. Embracing technology, maintaining a clear investment philosophy, and providing comprehensive planning services are crucial. Businesses that offer a duplicatable model, similar to Starbucks' Pike Place approach, will attract premium prices.

If you're an independent financial advisor facing the complexities of succession planning, connect with the IPC recruiting team for expert guidance. Ensure your business's legacy continues seamlessly and your clients receive the care they deserve. Reach out today to start planning for a successful transition.

What's Stopping You?

Full episode here.