Navigating Firm Transitions With Multiple Owners
Advisor transitions are complex enough for solo advisors. In addition to all the logistics, advisors I work with are often surprised by the amount of effort self-reflection takes. It’s answering big questions like:
What do I actually want my day-to-day work-life balance to look like?
How do I define success for my business?
Are my spouse and I on the same page with my business goals and what it will take?
What’s my endgame financially? What are my priorities beyond financial ones?
It’s deep work to sort through these questions.
Now, add in a multi-partner firm considering a transition. Every partner has their own answer to these questions, especially around the vision for the future.
Not to be gloomy, but I’ve seen multi-partner firms go from “we’re considering a move” to “we’re considering a split” when they realize their goals aren’t aligned. That’s certainly rare, but I think it highlights the need to be well supported in this process.
Due Diligence Starts With You, Not Potential Firms
When considering a transition as a group of advisors, due diligence starts with getting on the same page. Where do you assume that you’re aligned regarding the future? When’s the last time you engaged on key questions?
More importantly, you can’t vet firms until you know what the mutual goal looks like. One advisor may be looking for a P/E exit in 5 years while another partner may want to protect the culture for the next 20 years. Incentives guide selection.
This is a delicate area so there are a few lists of questions that I like to walk through with advisors. If you’d like a copy of this list, shoot me an email and say “list”.
With a shared, unassumed vision in place, real fact finding can begin. To keep things efficient, this is almost always placed in the hands of one partner who acts as the point person. They pass the info along, but we can make great progress with 1-on-1 dialogue.
This includes working closely with various RIAs and broker-dealers, scheduling meetings and calls, and organizing any necessary in-person meetings. It’s far better (in my experience) to facilitate periodic group meetings where we can discuss discoveries and progress.
Keeping Alignment Through Due Diligence
The other side of this conversation is keeping alignment as you discover information. For many advisors, even seasoned veterans, they’re just not aware of the boots-on-the-ground reality of transitions. Financial numbers, timelines, restrictions, etc–many assumptions get corrected along the way.
You may find that over time, individual partners may change what they think is the best decision as they get new information. While we’re making progress 1-on-1, the group needs regular, honest conversations.
Simple Thoughts, Big Impact
What I’m sharing today is nothing groundbreaking, but this is the takeaway: alignment is the priority in a group transition. Where you don’t have alignment, transitions are successful. The communication structure can’t be relegated to a second-tier priority.
My job for advisors is to help discover or create more alignment, but at the end of the day, it’s the advisors who need to run this three-legged race together. (remember the old carnival game?)
If you’ve been considering a transition but aren’t sure how to navigate the conversation with partners, I’m here as a resource. Sometimes, it may not be worth the trouble. Other times, the opportunity created is worth breaking the ice.