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Succession Done Right: Relationship Building Is Key

What to Consider When Bringing a Family Member Into the Business

25 Feb 2019
What to Consider When Bringing a Family Member Into the Business

Father-son team Bob and Dan Binn of Private Portfolios in San Mateo, California, have been business partners since 2000. Over the years, Bob has received countless calls from other advisors asking for advice on bringing their children into the business. 

His response: “Make sure they get trained elsewhere before joining you.”

That way, parent financial advisors can be sure they are bringing a family member into the business who wants to be in the business.

“Don’t push it, and make sure they sell you on why they want to join the business, not the other way around,” said Bob, who recalls the story of one unsuccessful family partnership.

“The advisor made it easy and gave his son everything, but the son was gone within eight months because he just wasn’t motivated.”  

Bob suggests getting trained by a stranger for at least three years. His son Dan had four years of industry experience before joining his practice.

Pat Hind’s daughter, Laurie, was introduced to the industry during college through working in her mother’s practice, Granite Financial, in Saint Cloud, Minnesota. But after graduation, she went her own way and specialized in long-term care insurance before joining her mother’s practice in 2006.

“The learning curve can be really stressful when working with family,” said Dan, who found his experience elsewhere gave him credibility with the staff and clients once he joined his father’s practice.

“I didn’t want him experimenting on my clients in the early stages,” Bob said, “but by the time he joined me, he had earned the respect of our clients beyond sharing
my last name.” 

Dan’s final piece of advice for the parent in a partnership? You can’t be a parent in the office. “You have to find a way not to talk about family issues at work and not to talk business when you’re with family,” he said. “My dad treated me as an equal when I joined him, and that made all the difference.” 

Pat’s and Laurie’s success can also be attributed to Pat learning to treat Laurie as an equal. 

“It took a long time for me to overcome a persistent desire to remain involved, but gradually, I gave up control of day-to-day operations,” Pat said. “Eventually, clients no longer turned to me during the meetings. They focused on Laurie. That’s when I knew we had made a smooth transition.” 

Download our Approaching a Potential Next-Gen Continuity Partner Workbook for helpful tips.

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