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When Your Continuity & Succession Plan Involves Family

07 Mar 2017
When Your Continuity & Succession Plan Involves Family



They have the appropriate education and understand the business.

Financial professionals Kim Kropp and John Moylan formed their independent financial practice in 1996. John had three sons, and the partners discussed whether to bring them into the business and how that would work. They agreed that each son would need to specialize in a different aspect of wealth management. In 2002, John was diagnosed with terminal cancer. Son Patrick, who earned degrees in finance and marketing, joined the firm in 2003; Sean became an estate planning attorney and joined the firm in 2004; and Devin earned his CPA designation and joined the firm in 2010. All three have earned the Certified Financial Planner designation and started to build their own books of business.

Kim said her education as a teacher for special needs children developed her ability to explain concepts in multiple ways, something she uses every day with clients and mentoring her future partners. Each of John’s sons had a different preferred learning method, something that advisors don’t always recognize in their successors. Don’t get trapped by thinking Junior needs to learn the business the same way you did – like cold calling. Be open to different approaches.


Their abilities match their role in the business.

Jeff Swaim joined his father John Swaim’s financial services firm in Louisville, Ky., in 2008 after working in sales in the shipping and home building industries. At the time, John shared office space and overhead with three other financial professionals who also hoped to bring their sons onboard as their continuity and succession partners. As his father’s only option for passing the business to a family member, Jeff became the “guinea pig” for the junior partner program. The Swaims, who opened their own branch, Falcon Financial Advisors in suburban Louisville, agreed on payout level, expense sharing and the client relationships Jeff would take over before he started.

“Selling yourself and building long-lasting relationships have been the keys to success,” Jeff said. “The skills that I learned from other industries definitely translate to working with our financial services clients.”

For financial professionals who bring family members on board before they’ve gained much experience elsewhere, aptitude and personality tests like ProScan, Kolbe, DISC and Myers Briggs can give both parties an objective evaluation of whether certain roles in the practice are a right fit. For example, the financial professional may excel at technical skills such as portfolio modeling, while the family member’s abilities lean more toward marketing. That combination can work well to grow a practice, provided each person understands and values the other’s role. 


They’ve earned their stripes somewhere else.

Financial professional Bob Binn always hoped one of his three sons would join the financial services industry, but he never counted on it. His son Dan, who worked in advertising sales while at the University of California-Los Angeles, didn’t move toward financial services until he earned his Series 7 as a “resume booster.” After four years working first at Wells Fargo Securities and then at Sanwa Bank Wealth Management, Dan joined his father’s firm, Private Portfolios Inc.

“I wanted him to come to my firm wanting to be here,” Bob said. “I told him if he ever wanted to work for me, he would have to work somewhere else first. That way, someone else could fire him if he didn’t do a good job. His prior experience gave him credibility with my clients and staff; he wasn’t just the new kid with the boss’s last name. He already had the background and experience, and that is what made him successful early on.”

Father and son discussed partnering for a year before Dan relocated to Northern California in 2000, taking a hefty pay cut. In addition, the timing of his move fell right in the middle of the Tech Wreck and recession in 2001-2002.

“I naively thought my dad would ask me to take the lead with more of his clients,” Dan said. “Instead I had to build my own book of business starting with a few clients I brought with me.”

According to the Kennesaw State University Coles College of Business, about 80 percent of the world’s businesses are family-owned. More than 30 percent make it to a second generation – but only 13 percent survive to the third generation. Kim Kropp, Bob Binn and John Swaim had well-thought-out and documented plans for bringing family members into the business – a good idea if you want your business to last past the next generation and maybe even the next.



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