In today's episode of "The Confident Advisor Practice Podcast", a podcast from the Horizon Advisor Network, hosts Bill Bush and Chad Soileau discuss the best practice for advisors including continuity and succession.
Episode Highlights
- 01:12 – Bill mentions that only about 10% of advisors have written, executable continuity documents in place.
- 03:50 – Bill asks about the 'Continuity Agreement', he enquires what is it, how do you get one in place and what does it cover?
- 06:10 – There are two pieces with continuity agreements. It can be temporary, and it can be triggered by a short-term disability or it can also be triggered by the owner passing away or death, says Chad.
- 07:33 – Chad says, the other thing that it does for the protector is typically there's going to be something called a right of first refusal.
- 10:05 – Buy Sell is a confirmation that yeah, I do want to buy it and you're like, Yeah, I do want to sell it to you. So, we're formally agreeing that we're going to go into this relationship of a future purchase, states Chad.
- 12:45 –Internal succession is the easiest thing to do because that internal partner is usually very knowledgeable about the book, the clients, and with staff.
- 14:46 – Bill asks about some of the things that could potentially go wrong when you're looking at continuity and secession.
- 16:50 – Bill says, it's in everybody's best interest; you find the right partner, whether you're the buyer or the seller, it's ultimately an agreement in a partnership, and that hopefully is successful, so that's key.
Three Key Points
- The reason why an advisor should even consider the steps when we're talking about continuity is, that it's the beginning process of you having a plan for your business. The importance is, that it does a lot of protecting, and in that it protects your clients, assets, team, your practice, family and protects the value of your book of business. It can also be your foot in the door to becoming a secession partner, but at the end of the day we own businesses, and that's your book of business. The very first step is having the continuity agreement and that does so many things to do protecting.
- Chad explains that 'Continuity agreement' is typically a shorter-term protection policy in a sense that lets that protector come in, lets that owner step back and take care of themselves. You have that span of time that the protector will come in, manage the book, and do the servicing.
- The biggest thing with Continuity Succession is, that it's not communicating well about what's expected to happen or to not happen. You should have an understanding of each other's philosophies.
Tweetable Quotes
- "90% of clients want their advisors to have a plan in place to protect their assets knowing what's going to happen in the event should something go wrong." – Bill Bush
- "Continuity agreement can also be your foot in the door to becoming a secession partner." - Chad Soileau
- "The great thing about the continuity agreement, you can really make it to whatever you want it to be." - Chad Soileau
- "Buy-sell is typically a game you have, an owner and a buyer." - Chad Soileau
- "If something happens, I'm not obligated but what I want to write the first refusal." - Chad Soileau
- "Revenue is key in valuation. So, you want to protect that as much as you possibly can." - Chad Soileau
- "Always making sure that the agreements are up-to-date." - Chad Soileau
- "The secession agreement is basically the agreement to buy right now." - Chad Soileau
Resources Mentioned
