Succession planning can get emotional. Passing down a business to new owners involves a long list of psychologically difficult tasks, from surrendering control to admitting that one's career is ending. Even among financial advisors, many of whom guide their clients through retirement, the idea of handing over their life's work is sometimes too much to bear.
"Advisors don't want to retire," said Brooklyn Brock, a certified financial planner and exit coach. "The word retirement is synonymous to them with death."
This anxiety may be part of why succession plans are so difficult — and so often fail. Across the U.S. private sector, 30% of newly hired executives step down within their first 18 months on the job, according to the management consulting firm
This issue is especially fraught in the wealth management industry, which is badly in need of successors. The average age of a financial advisor in 2022 was 57, according to a
Meanwhile, the need for financial services is about to explode. Over the next few decades, experts are anticipating a "Great Wealth Transfer" as baby boomers pass away and younger Americans inherit their wealth. According to one estimate by research group
Brock, seeing the problem three years ago, founded Ellevate Advisors, a Tulsa-based firm that helps financial advisors with continuity and succession planning. The inspiration for Ellevate, she said, came from watching other advisors stumble into crisis when it came time to hand over the reins.
One example, who Brock preferred to leave anonymous, ran a successful firm in Oklahoma for more than 30 years. When he was in his 70s, he felt ready to pass the torch and sold it to his two sons, giving each of them 50% of the company for just $1. The proud father would still come to the office a few days a week but would leave the biggest responsibilities to his children, giving him more time to relax and play golf. It seemed like the perfect succession plan.
Then the problems started. Away from the office but not fully retired, the patriarch fell out of the loop on the latest work procedures. Eventually a client filed a complaint, accusing him of selling a product without making all the required disclosures. The sons now wanted their father out of the firm. The father insisted on staying. Suddenly, this once-thriving business was struggling with both internal conflict and a threat from outside, all because the succession was incomplete.
To find a way out of the impasse, the sons hired a consultant who had extensive conversations with all three of them. Through those discussions, a crucial fact came to light: The father was refusing to leave because he thought he couldn't afford to retire. Now the sons could see a way out. They brought in a financial planner to review their dad's finances, and it turned out, happily, that he was wrong; he did have enough savings and assets to retire comfortably — and that's what he did.
The lesson Brock drew from the experience was that while there are many logistical problems associated with succession planning, sometimes the more difficult ones are psychological.
"It's hard to solve the problem of wrapping your mind around 'What is my identity outside of work? What makes me important without my business?'" Brock said. "And a lot of advisors can't make that transition successfully."
Brock is far from the only one who has noticed this challenge. Many financial advisors — both business owners and their successors — have struggled to navigate the emotional minefield of succession. Meanwhile, coaches and trainers like Brock have built businesses around helping them. All of these professionals have advice to share on how to make a succession successful.
Set an exit date
One of the most important tasks for a succession is simply setting a deadline. Even if it's a long way off, experts say, setting a specific ETA for the transition is crucial to making sure it actually happens.
Nick Gertsema, a 39-year-old certified financial planner in St Joseph, Missouri, is currently in the process of succeeding his 65-year-old father, Mike, at
"Too often, succession gets dangled out as an incentive — 'Someday, this will all be yours,'" Gertsema said. "It's not that there's no intention of following through, but it's a 'maybe someday.'"
In one case, the CFP said he watched in dismay as a friend — who he preferred to keep anonymous — was declared the successor to a firm, but there was no date set for when her boss would leave the picture.
"The owner had some things taken off their plate, and they started enjoying their job a little bit more," Gertsema said. "So their retirement date got pushed back and pushed back and pushed back, and now it's nonexistent."
In the end it was Gertsema's friend, not her boss, who left the firm.
"She said, 'This is never happening,'" he said. "They had a lot of difficult conversations, and then she had to take care of herself and start to move on in her career."
Experts say this is a common problem. When a business owner is close to retiring, their work is likely at its most lucrative, and — if they've already offloaded some responsibilities — its least burdensome, making it tempting to stay. On top of that, there's the identity issue — why would someone want to leave a business they spent their whole life building?
In Gertsema's own succession, the first thing his father did was mark the calendar for when he'd retire: February 2024. And he did this way ahead of time — in 2020, he relinquished all control of the firm, and since then he's stayed on as a consultant and coach. That's given his colleagues and clients plenty of time to prepare for his departure and adjust to his son's leadership. And in a little more than a year, the father will step away entirely.
"The biggest thing he did was he set a date — 'This is the date I want to be out' — and we started working backwards," Gertsema said. "As of that day, he's not coming to the office anymore."
Learn to let go
Another key to a successful transition is something that doesn't always come easily to financial advisors: relinquishing control. As the owner hands over the reins, the successor needs what Gertsema calls "grace and space" — some room to lead the business in their own way, and even to make some mistakes.
"I'm not going to be who Mike was," Gertsema said, "and I'm not going to be able to take over 100% on day 1."
Another successor who's had to fight for this "grace" is Justin Stevens, a certified financial planner in Rochester, New York. He and his mentor, fellow CFP Peter O'Keefe, co-founded the RIA O'Keefe Stevens Advisory in 2017, with O'Keefe as CEO and Stevens as president. From the beginning, they decided that when O'Keefe turned 72, he would retire and hand the business down to Stevens, who is 31 years younger — a good example of setting a clear exit date. But once it was time to start preparing for the transition, things didn't go smoothly.
"It's been a roller coaster of a year," Stevens said. "There was a lot of tension between us."
In 2022, O'Keefe turned 66, beginning what was supposed to be a six-year timeline for winding down his work responsibilities. Instead, Stevens said, O'Keefe clung to "antiquated" procedures, resisted new ones and insisted on having the final say on major decisions.
"Some of the emotional difficulty is giving other people on the team that freedom to do the job in a new way," Stevens said. "A lot of the tension arose from Peter having to have the final say… Like, 'We're trying to grow, but you're bottlenecking us.'"
On the other side, O'Keefe said it was hard for him to let go of the business that had become his life.
"Emotionally, it's very difficult," O'Keefe said. "Your business involves relationships. You don't just have relationships with these people; you love these people."
Eventually, the tensions reached a boiling point.
"That all, unfortunately, came to a head with, I would say, an emotionally charged conversation where we laid it all out," Stevens said. "Basically, expectations for each of us were not being met, but there was also not enough communication around what those expectations were."
Though Stevens and O'Keefe agreed the conversation was not pleasant, it had an unexpected effect: Their relationship began to improve. Stevens took on more responsibility for growing the business, and O'Keefe began to loosen his grip on the controls.
"I kind of think that my way is the best way," O'Keefe admitted. "But now I'm saying, 'Let's experiment with some of your ways.'"
However belatedly, Stevens and O'Keefe arrived at exactly the kind of approach that succession coaches recommend: one where the top priority is the health of the business, however the new leader chooses to manage it. The successor should have room to grow into their new leadership role, and the old ways should not become the enemy of the new. That's basically where Stevens and O'Keefe ended up; what would be even better, experts say, is if their conversation happened earlier.
"The best-case scenario for succession plans is when the seller takes that approach before the transaction even happens," Brock said. "So they're talking to the buyer like, 'This is the way that I've run it. You don't have to run it that way. How do you see the business operating? What can I do to help you?'"
Plan for life after succession
For business leaders, one emotional barrier to retiring is not knowing what comes next. Without a clear picture of life after work, the void left by the end of a career can be daunting. This was particularly true for O'Keefe, who said his life was defined by his mission at O'Keefe Stevens Advisory.
"My life will not work if I don't have a sense of purpose," he said. "The magazines and stuff that show you sipping a cocktail in Florida or walking on the beach have 0% interest for me."
The solution, experts say, is to clearly define the new life the retiree can look forward to.
"One thing that I always tell my clients is you're not retiring from something, you're retiring to something," said Nicole Cope, senior director of Ally Invest Advisors. "So that becomes a very important conversation: finding out what their hobbies are … finding ways to fill their time."
In O'Keefe's case, Stevens intuitively grasped that this would be important for his partner, and he told him so.
"I pointed out that Peter's life is like a three-legged stool. He's incredibly committed to his family, to this business and to his health," Stevens said. "The issue with the three-legged stool is if you take out one of those legs, like if we take out the work piece, that stool is going to fall over."
After a "heated discussion," O'Keefe took this advice to heart. Since then, he's found a new project to form a new stool leg: passing on his skills as a business leader to others. At some local public schools, he's begun teaching adult education classes about goal setting — a practice that he says was crucial to his career.
Stevens was thrilled to watch his partner dive into something new.
"Peter is very engaged right now," he said. "As much as he needs us to grow this business and make sure that it's going to last beyond him, we also need him to work just as hard on what he's going to do next … and he's taken that on with the enthusiasm of a 21-year-old who just graduated from college and started his first job. It's amazing to see."
Communicate, communicate, communicate
For a succession to work, experts say there needs to be total transparency about the business. It may take time for the owner to get comfortable with this, so Brock recommends gradually working your way up to the most sensitive information, like valuations and performance reviews. But the conversations have to happen.
"If someone is not comfortable sharing that information, or if they brush off questions about their succession plan, that's kind of a red flag," Brock said.
It may also help to have both sides sign a non-disclosure agreement right at the start of the negotiations, just so everyone feels safe being candid. If that seems excessive, Brock points out that her own father made her sign an NDA before telling her he was retiring.
To make sure the conversations go smoothly, it may be useful to get outside help. In Gertsema's case, he and his father have been working with their parent company, the Carson Group, a nationwide partnership of financial advisors that also provides training for new CEOs. A big part of what Carson does is facilitate communication between business owners and their successors.
"They need to have their own conversation about, 'What is the purpose? What is the vision of the firm? What do we want it to be in the next five to 10 years?' And find some sort of alignment," said Mark Wellwood, vice president of business consulting at Carson. "Until they have that alignment, none of the other stuff is going to work out."
In addition to talking to each other, Brock said, the owner and successor should both confide in someone else. This could be a coach, a friend or a family member. The important thing is that each person is able to think out loud about the succession on a regular basis with someone they trust.
"If they're not talking to anyone, that's a red flag that they're not processing their emotions, that they're going to get cold feet because they haven't thought this through completely," Brock said.
There also needs to be transparency with clients. At Gertsema Wealth, Nick and his father notified their customers just as they were starting to form their succession plan so they'd have years to prepare.
"We pulled in our advisory board, which are a lot of clients that [Mike's] worked for for many years, and asked them, 'How do you want this transition to look?'" Gertsema said. "We had nine people in the room and probably nine different stories, but then we had an idea of what's going to help them feel taken care of."
With everyone in the loop, Gertsema hopes the actual day of succession will be "uneventful."
"We don't want this line in the sand where one day it's pre-Mike and the next day it's post-Mike," he said. "One day, he just won't be here anymore, and we'll take his name off the door."
