How to Land a Great Successor for your RIA

Introduction

Successful RIA transitions are the result of careful planning, deliberate development, and thoughtful execution. Whether you’re just starting to think about your succession or actively seeking your future replacement, here’s how to find and nurture the right talent for your firm’s future.

1. Finding the Right Candidate

First, it’s important to understand that you’re not looking for your clone. Tomorrow’s wealth management challenges will require different skills and perspectives than those upon which you built your firm, so look for candidates who complement your strengths while bringing fresh ideas to the business.

Key places to look:

  • Industry networking events and conferences
  • Local financial planning programs
  • Professional associations
  • Your existing network of CPAs and attorneys
  • Internal employees who show ambition and leadership potential

2. Attracting Top Talent

The RIA industry is experiencing a significant talent shortage. Cerulli reported that in 2022, the number of new financial advisors grew by just 2,579. Competition for talent is fierce, and the best candidates have options. To attract them to your firm, you need to offer more than just the possibility of future ownership. Create a clear value proposition that includes:

  • Defined career path with measurable milestones
  • Meaningful work from day one
  • Competitive base compensation
  • Clear timeline for advancement
  • Investment in their professional development

3. Preparing Potential Successors for Leadership

Once you’ve found promising talent, maintaining their interest and commitment is crucial. That means including them in business planning meetings, creating opportunities for them to hone their leadership skills, and providing regular feedback and mentoring.

Keep in mind that succession isn’t just about transferring ownership; it’s about transferring knowledge and responsibility. Create a structured development plan that includes:

  • Exposure to all aspects of the business
  • A progressive increase in client relationship management
  • Involvement in strategic decision-making
  • Regular assessment of skills and capabilities
  • Clear communication about expectations and timeline

4. Managing the Transition Process

We’ve seen firsthand that transitions can be messy and emotional, and they rarely go exactly as planned. But putting a solid framework in place can help smooth out the process and minimize the disruption felt by clients and other employees: 

5. Start with Clear Milestones

  • Year 1: Give them ownership of specific client relationships (start with your B and C clients)
  • Year 2: Hand over investment committee responsibilities and let them lead client review meetings
  • Year 3: Transfer primary relationship management for top clients and involve them in firm-wide decisions
  • Year 4-5: Begin stepping back from daily operations while maintaining quality control

6. Document Everything 

  • Create detailed process maps for your key workflows
  • Record your client meeting structure and follow-up procedures
  • Write down those “insider tips” about specific clients (their communication preferences, family dynamics, key concerns)
  • Build a library of your most successful client presentations and proposals

7. Handle Client Communications Thoughtfully

  • Start mentioning your successor in client conversations early – plant the seed
  • Introduce them first as a team member, then gradually position them as a decision-maker
  • Host small client events where they can showcase their expertise
  • Write a personal letter to each client explaining your transition plan

8. Set Up Valuable Check-ins

  • Weekly 30-minute standing meetings to address immediate concerns
  • Monthly deep-dives to review progress and adjust course
  • Quarterly assessments of client feedback and retention
  • Annual strategic planning sessions to ensure you’re both aligned on the big picture

9. Common Succession Pitfalls to Avoid

At SRG, we’ve helped hundreds of firm owners execute effective successions. Here’s what we tell them to look out for: 

  • Assuming your successor can read your mind 
  • Skipping the training period in rush to transition
  • Looking for someone just like you
  • Shutting down new ideas and approaches
  • Creating an “eat what you kill” compensation structure

The Right Support Makes All the Difference

Finding and developing your successor is one of the most important decisions you’ll make for your firm’s future. It requires careful planning, clear communication, and ongoing commitment from both parties.

Ready to start building your succession plan? We have resources to help guide you through every step of the process. Get in touch with our team for more information.

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This resource provided by Succession Resource Group, Inc. (“Provider”) is intended solely for informational purposes and general guidance on a variety of situations and may not be suitable for all advisors. This resource is provided “AS IS” and “AS AVAILABLE,” without warranty of any kind, express or implied, and should not be relied upon as legal, tax, financial, investment, or other professional advice. This resource cannot and does not account for the unique circumstances of each specific situation and must be reviewed by your own independent attorney, CPA, and other relevant professional advisors prior to beginning any due diligence process or taking any action in reliance on this resource. You acknowledge that no attorney-client relationship is created through the provision or use of this resource. Succession Resource Group, Inc. makes no claims, promises, representations, or guarantees whatsoever, whether express or implied, regarding the accuracy, completeness, timeliness, reliability, suitability, adequacy, or fitness for any particular purpose of the information contained herein, and expressly disclaims all such warranties to the maximum extent permitted by applicable law. Nothing in this resource should be construed as a recommendation. By utilizing these materials, you: (i) assume full responsibility for any loss, damage, liability, cost, or expense (including reasonable attorneys’ fees and costs) resulting from or in any way connected to the use of, or inability to use, this resource; and (ii) release, defend, indemnify and hold harmless Succession Resource Group, Inc., its affiliates, officers, directors, employees, authors, contributors, agents, licensees, successors, and assigns from any and all known or unknown claims, demands, damages, losses, liabilities, costs, or causes of action that may arise, at any time, out of or relating to your use of or reliance upon this resource.