1. The Efficient Frontier of Succession: Maximizing Practice Value
Moderated By:
Alois Pirker
Aite Group
Eric Brotman, CFP, AEP, CASL, ChFC, CLU, LUTCF
Brotman Financial
Brian Heckert, CLU, ChFC, AIF, QPFC
Financial Solutions Midwest
Stuart Silverman
Fusion Advisor Network

2. Overview White Paper Project
Commissioned and published by NFP Advisor Services Group and produced by Aite Group.
Goal: to examine the current position of financial advisors in the area of succession planning, identify when advisors should take key steps in the succession planning process, and determine how buyers and M&A firms evaluate advisor practice values.
Methodology
Online survey of 228 practice owners conducted in March 2012.
The data in this study has a 4-point margin of error at the 95% confidence level.
Phone-based interviews with 10 M&A firms, consultants and strategic buyers focused on the financial advisor market.

3. 40% of Practice Owners Plan to Transition Within 10 Years ...
Source: Aite Group March 2012 survey of 228 practice owners

4. Around Half of Practice Owners Do Not Have a Succession Plan
Source: Aite Group March 2012 survey of 228 practice owners

5. Internal Succession: The Most Popular Succession Scenario
Source: Aite Group March 2012 survey of 228 practice owners

6. Learning From the Past: Client Retention is the Biggest Issue
Source: Aite Group March 2012 survey of 228 practice owners

7. Succession Planning : Closely Linked to Understanding and Improving Valuation
Source: Aite Group March 2012 survey of 228 practice owners

8. Practice Valuation Formula

9. Succession Milestones
Around 10 Years Before Transition
Consider the impact of succession on your clients
Decide on an internal or external succession strategy
Establish a detailed succession plan
5 to 10 Years Before Transition
In the case of internal succession, hire the potential successor and define the length of the trial period.
Calculate a practice valuation
2 to 5 Years Before Transition
Consider handing over the practice to internal successors in several stages.
In the case of external succession, practice owners should start the search for an external buyer
In either case, a practice valuation should be produced
Practice owners should also focus on getting their house in order.
Adjust corporate structure.

10. Succession Milestones (continued)
Around 1 Year Before Transition
Make a final decision on who will succeed the practice owner and agree upon the terms of the practice acquisition.
Develop a detailed plan that defines the steps of implementation for necessary technology and operations migration, and necessary product changes.
Develop a communication plan to define how the succession will be communicated
When introducing the successor to each client, conduct meetings similarly to how they have always been conducted with that client.
Get client consent
After the Transition
The selling advisor could stay for a number of months, post-acquisition.
Ideally, a departing advisor would continue to work in an ambassador role with his or her successor, providing the emotional connection with long-standing clients.

11. Thank you!