Transcript | Transitioning your practice

Episode 35 – Transitioning your practice (Mike Ankers & Christina Clement)


Sarah Widmeyer  0:16 

Welcome to Conversations on Wealth, a podcast dedicated to helping Canadians navigate the complexities of wealth with a multi dimensional approach to planning and wealth management. I'm Sarah Widmeyer, Senior Vice President and Head of Wealth Strategies at Richardson Wealth. And joining me today are two of my colleagues who I know very well, Mike Ankers, Senior Vice President and Head of Advisor Experience and Growth, and Christina Clemente, Vice President (of) Growth and Execution. Welcome to you both.


Mike Ankers  0:48 

Thanks for having us.


Christina Clement  0:49 

It's a pleasure to be here.


Sarah Widmeyer  0:50 

I'm so glad to have you both, we're going to have fun. So today, we're talking about advisors and the decision to transition a business. We know how hard advisors work to build their businesses, years, sometimes even decades, they are truly and fully invested in their client's financial lives, so deciding to move on from something you've put so much time and effort into is a big decision. And it really needs to be done, right. Whether you're an advisor who's looking to retire and pass the business on to a successor, or a new advisor looking to take on a new book of business, ensuring shared qualities like trust, compatibility, and intention is so important for a business that's built on long term relationships. So Mike, let's start with you. We know that our industry generally looks at business succession as a transaction arrangement. But as every good advisor knows, when dealing with their own clients, it's so much more than that. And it goes far beyond just the financial deal. Can you tell us why getting it right is so important for our firm and our advisors?


Mike Ankers  2:09 

That's a really great question, Sarah. And this is something that I've taken very personally over the years, because people do treat it like a transaction, an advisor spends their entire career building something meaningful, something that's important to their clients. And it comes down to a retirement date and a price and off they go. And it seems very impersonal, both for the advisor and the clients. And it, like you say, it became a transaction at some point. At Richardson Wealth, as you know, advisors are our clients. So when we talk to our clients about what their future plans are, it's no different from advisors having the same conversation, we want to know what's important, we want to know what's important for them to go through, with, through the transition process, you know, financially, emotionally, etc. What's important for them to find in a successor and ugh, and ultimately, what's important to their clients. You know, nobody knows their clients better than an investment advisor who does their job very, very well. And we want to know, our advisors the same way. So ensuring that we treat them with the respect that they've deserved, and earned over many years, ensuring we have a plan that's right for their clients is all very, very key to making a smooth transition in place. And it's again, it's much more than just the time and the price.


Sarah Widmeyer  3:21 

It's relationships


Mike Ankers  3:22 

It's relationships, it's ensuring that trust is passed along. It's ensuring that we've respected the person for who they are and what they've built, and everything. It's all encompassing, and ugh


Sarah Widmeyer  3:33 

Yeah.


Mike Ankers  3:33 

And I think it's an important piece.


Sarah Widmeyer  3:35 

(Breathes in) Okay, Christina, let's start with talking about advisors who are transitioning their practice to another advisor, can you share some of the considerations that advisors should take into account when they are evaluating the best successor to take over their practice?


Christina Clement  3:52 

Yeah, thanks, Sara. So I'd say the number one consideration is fit. Do these people get along? Are they a good fit? Another thing, which is relation to fit is the alignment between the beliefs and values of the individual. There are other considerations like what's my investment discipline versus your investment discipline? What's our approach to wealth management? How do we see that? And things like the client service model? There are many, many factors, but I'm gonna say fit is the is the number one thing because this is a very important relationship that you want to get right.


Sarah Widmeyer  4:25 

Yeah. And I hear relationship again. So we're building a theme. Christina, what about advisors who are considering acquiring a practice? What are the key things they should be thinking about?


Christina Clement  4:39 

Yeah, so when we were talking about relationships before, ultimately, this will be a partnership before it's a succession or an acquisition. So ask yourself, would you choose this person as a partner, if you were going into a full time partnership that might last for the next five or 10 years? So that kind of is your guide. And how do you make that decision before you really know that person? So this is a transition process that requires many, many years. So you need to kind of give it the time, but open and transparent conversations around timing, because what you think you're going to want, and what you ultimately do want might be different things, roles and responsibilities, who's going to do what, on the team, now, and in the future. What happens to the existing team members of a practice that is being taken over? Are they going to be part of the practice going forward? What are the desires of both individuals in a transaction like that?


Sarah Widmeyer  5:35 

That's a great advice. And I'm thinking also about, again, though, the whole relationship angle in that the advisor that you're looking to build a partnership with, there has to be a lot of I would think the similarities in the way that you view the business and because there are clients in those businesses, and the clients have built relationships with the advisor. So you really need to be the fit, you know, leveraging off of what Mike said, the fit and the relationship and the partnership, there needs to be similarity, because in the end, there's clients that need to transition to the new advisor. And so there has to be a fit and relationship that can be easily mapped to the new advisor.


Christina Clement  6:18 

Yeah, it's a transference of trust. Yeah. So if Mike has the, the book of business, and you are buying that business, and I am the client, I trust Mike. And I'm going to look at Mike to say, "is this a good thing? Do you think this is a good thing for me? Are we making the right decision?" But because I trust him, and he trusts you, or go, I will trust you.


Sarah Widmeyer  6:38 

That's right.


Christina Clement  6:39 

But the two of you have to know each other very well, in order for me to feel that in an interaction.


Sarah Widmeyer  6:44 

Yeah, yeah, yeah.


Mike Ankers  6:46 

If I can just jump in there first, listen, there are really two tests. And one is, will you trust your successor to manage your own wealth?


Sarah Widmeyer  6:56 

Mmhmm


Mike Ankers  6:56 

So "Will they be your advisor?" is litmus test number one. And if that's a no, then it should be a full stop on that relationship.


Sarah Widmeyer  7:02 

Right.


Mike Ankers  7:03 

Because the last piece of advice you give your clients is who to deal with next. So, and you have to believe in that fully. And then secondly, to that, that comes with expectation management. And I use a term called expectations meetings, and it's not a meeting about, Sarah, I need you to do this. Or, Sarah, I need you to do that. When you form a partnership, and it's about communication. Here's what I'm expecting, I'm expecting you to introduce me to your clients, and I'm expecting you to help me get to know them better, just like the successor will then have the expectations of, or the, the retiree rather, will look at it and say my expectation is that you invest the time to get to know them, that you do that. And having that open communication, like you've picked on the string of relationship. Communication is the ultimate key to a great relationship.


Sarah Widmeyer  7:50 

Yeah, totally. So Christina, I'm gonna toss the ball back to you again, the key to a successful transition lies in a combination of time and planning. When should the business succession planning process start? And what are the factors that go into a successful transition plan?


Christina Clement  8:10 

Yeah, so this is an interesting question. And it's not sexy, fast, or exciting (laughs)


Sarah Widmeyer  8:16 

(Laughs) But why not?


Christina Clement  8:18 

Because it has a lot to do with planning, not that planning isn't sexy, but it, to ensure a new, good outcome, take your time choose well. I always think of this as like choosing a life partner. Choosing a partner in business is like choosing a life partner. And so make an educated decision, and one that is well informed. So timewise, seven to 10 years, which sounds like a tremendous amount of time.


Sarah Widmeyer  8:41 

Wow. Wow


Christina Clement  8:42 

But I'm here to tell you, sometimes your first choice isn't your ultimate successor.


Sarah Widmeyer  8:48 

Yeah.


Christina Clement  8:48 

So you need to kiss a lot of frogs to find the prince here. And you should take your time. And that's okay to think, okay, maybe Mike and I are aligned in this, let's work in parallel together and see how that goes over a period of time, we think we're a good match, but maybe we discover we actually want different things as we go along. So seven to 10 years really gives you a good idea. And I believe a little bit in "Put out to the universe what you want, and things start to come back to you hence why you need to take a while." The other thing is "Is your successor inside of your organization, or are they outside of the organization, and they're thinking of making a transition into your business?" And if they are, that's a different thing that requires more time. So budgeting where you can work in parallel streams that you can make good educated decisions and go from there.


Sarah Widmeyer  9:39 

Okay. So, Mike, how can Richardson Wealth help advisors navigate the difficult and important topics associated with transitioning a business? And what kind of support do we offer for this pivotal time in their career?


Mike Ankers  9:57 

That's a great question. We hold ourselves out to be great at this. And we're going to continuously improve our process. What people can count on now is a hands on approach from all levels of the firm. So from Christina, myself, the branch management teams, yourself, your teams, because marketing gets involved, and Wealth Strategies get(s) involved, it's an all encompassing approach to helping somebody transition their practice, I think that's first and foremost, to say, we're all invested in this. What's important to us is that it's on your terms as an advisor. So we don't know what's best for you and your clients until you help us understand that once we understand that we can help you roll that out. So there is that piece, we can help with valuations of practices, and I always say evaluation of a practice is much like the I think it's MCAT, you get for your house where you get your house assessment, well there's the real assessment that you see in the me-, you get in the mail, and then there's the market value.


Sarah Widmeyer  10:52 

Right.


Mike Ankers  10:53 

So we help have that conversation. Some advisors are great at communicating their needs from each other, others are not so good.


Sarah Widmeyer  10:59 

Surprise, surprise!


Mike Ankers  11:00 

So ugh, some people need to help along the way. So we're there to help open up those conversations with respect to pricing and timing, and what's important, and what are your values. So we help with that. There's also the financial side of it too, which we tend to leave to later on in the conversation. Once you've established what the people want, what their desire is, what their timelines are, then you can actually start to talk about the financial transaction. And we have numerous different ways to finance that transaction. For example, the two advisors can work it out between them, how they want to transition clients and pay one and to the other, we have an option where the firm will pay and loan the money to help that transaction happen. And we have another option too, where the buyer doesn't actually have to put up any money, where the firm will actually buy the practice, and that's for very risk averse people who just want to manage the money without having that overhang. So we've made the financing very attractive and flexible again, and it's completely advisor driven. And what we're working toward now, Sarah is when people retire... So let me back up, nobody wants to retire anymore. And I would say I know very few people who actually are successful at retiring, it's always a transition to something else. And we've seen many of our advisors go on to their next careers. And it's fascinating to watch what happens next. So I'm going to try to remove the word retiring from my vocabulary. But uhm, what they want to do is they don't want to feel disconnected. So there ha-, doesn't have to be an end date, where you walk out the door, it slams behind you, you don't have your pass card, and you're never allowed back. So we are figuring out now how to best engage people post transaction.


Sarah Widmeyer  12:34 

Great.


Mike Ankers  12:34 

So how do we keep that in there? And, and how do we keep them involved in the organization? I mean, these are people who are pillars of the organization, they're part of the fabric of our culture, it's terribly sad to say goodbye. So the question really became is "do we have to say goodbye to them?" And the answer is no. So how do you keep them engaged? So we're working on an alumni program, where we can keep people engaged, some have expressed a desire to say, "I'm really good at A, B, and C, and if I can help mentor the next generation-


Sarah Widmeyer  12:34 

Fabulous. Yeah fabulous.


Mike Ankers  12:35 

keep me involved for that." So you know, I look at the US colleges, and they're great at this right. Every year, everybody shows up and puts their team colors on and screams it from the, the, the rooftops how proud they are of that organization. I want to create that in financial services.


Sarah Widmeyer  13:15 

Awesome.

 


Mike Ankers  13:15 

And that's something that Christina and I are going to be focused on for the next little while.


Sarah Widmeyer  13:19 

I think that's awesome. Another awesome thing that I think of is that our CEO Kish Kapoor recently set a bold recruitment goal, to see women make up half of the financial advisors at Richardson Wealth over the next five years. Mike, can you talk a little bit about how we're creating opportunities for women to enter the role? And in what ways we are encouraging and mentoring our existing senior associates towards becoming Investment Advisors?


Mike Ankers  13:19 

Oh, that's a really good question. And I don't have - I don't have a silver bullet on this one. Yeah. But I'll tell you what I look at from my point of view; it's not about simply running a training program and developing a whole new set of advisors. The truth is, we have many internal candidates who've never had an opportunity to step up to become an advisor. So what we're looking at is how do we move, remove the barriers to entry for young women to come into this business? And when I've interviewed people, one of the biggest barriers to entry is the financial risk involved.


Sarah Widmeyer  14:20 

Yeah.


Mike Ankers  14:21 

So I know my wife and I are very different. She doesn't understand (the) commission based world, and to her that would very much stress her out. She works in social services, she's used to getting her paycheque. So, when we looked at the different financing options, we thought, let's provide a menu to people so that if you're not comfortable taking on $2 million in liability, how do we help you with that? So we want to remo, remove that barrier, then we want to start to recognize the people internally who can step up into that role. And frankly, it's not for everybody. It does involve risk and involves some leadership skills, etc. And that's something that Christina has been working on to, to say, how do we start to have the conversation with associates who do want to step up into that role. So if we can help identify them, train, mentor, and then open the doors of opportunity to them, that's going to be our very big first step. And I would say second to that, and I don't want to steal all of Christina's thunder here, but having support groups where people ask questions to each other, one of the things about this business, as you know, is every advisor runs a unique practice. So sometimes they're very siloed. So how do we open the doors to have people sharing more information and sharing ideas, and creating those opportunities? So I think that if we can remove barriers to entry, if we can educate, support, build peer groups internally, then we can start to recognize people who want to take that leap.


Sarah Widmeyer  15:40 

Sounds like a great start. Christina, anything to add?


Christina Clement  15:43 

On that point, particularly?


Sarah Widmeyer  15:43 

Yeah.


Christina Clement  15:46 

Yeah, I agree with Mike, I have this notion that our eye is born or made, right, and I've been in this industry 25 years, and I struggled with that. And I would have said before I think eyes are born, but I actually believe that you can be coached into the role. So can I change your risk tolerance? Maybe not. But can I reframe how we approach this business and how we have, you know, there has to be an evolution of this business, right? We are leaning more and more toward wealth management, we are going toward a skill set that maybe is realized naturally, for some people, and we haven't necessarily recognized those skills in the past, I think they're coming more into play. So there's opportunities for different players in the market now than there has been. And we just need to kind of reframe the-, how we think about it, and what success looks like.


Sarah Widmeyer  16:34 

Yeah, I so agree with that. I think as the business has grown into more of a wealth planning approach, women are naturally and again, I'm going to overgeneralize for a moment, so please forgive me, but love planning. And they naturally are attracted to that side of the business, or that side of financial investing and wealth management. So I would think that as the business has moved, so too might be the types of people that we attract, and women, again, more naturally inclined to plan, it might be more attractive to women. If we remove some of the barriers to entry, which Mike, you know, so well articulated.


Mike Ankers  17:17 

There's also Sarah, and I'll say, it, you're absolutely right on that, and we see that shift. EQ is now equally valued with IQ.


Sarah Widmeyer  17:25 

Yeah


Mike Ankers  17:25 

If not leaning toward more EQ.


Sarah Widmeyer  17:27 

Relationships


Mike Ankers  17:28 

Relationships, relationships, communication,


Sarah Widmeyer  17:31 

Yeah, yeah, right!


Mike Ankers  17:31 

how do you feel? It's all of the soft skills that are really developing relationships. And I would say that that's brings on a new skill set, I think one thing that that our firm has done really well is we try to find the strength of the advisor, and we can help with the other pieces. So if you don't want to manage your own money, Sarah, I know that your team can help support people who say, let us manage the money, you go do the planning. If you're not good at marketing, let us help you with that, while you go do the planning. So we really try to find the strength of each advisor team. And then we support the other pieces. So the best teams out there are the ones that focus on what they do really well.


Sarah Widmeyer  18:09 

Yeah.


Mike Ankers  18:09  

And sometimes it is investments purely. And they're great portfolio managers, and they want to focus on performance. And then they outsource the planning. So when we start to embrace a different skill set, other than just the quantitative piece, we open up doors,


Sarah Widmeyer  18:23 

I agree. [Extro music begins]


Sarah Widmeyer  18:36

So as you can tell, we could keep going on this subject, uhm, and I know that we need to wrap up. Are there any last thoughts that either one of you would like to share? Christina?


Christina Clement  18:46 

Yeah, so one thing I know from working with investment advisors for the last 25 years is that every IA wants to finish well. So this is a transition for them. As much energy as they put into starting the business, building the business is transitioning out of the business. So this is their life's work, their legacy and how they have helped their clients realize their goals. They want to ensure that there's consistency and congruency in the process for their clients in the transition. So planning and mindfulness really, in this process is really, really important for everyone.


Sarah Widmeyer  19:21 

Okay, Mike,


Mike Ankers  19:23 

My closing comment is, this is an important business to people.


Sarah Widmeyer  19:29 

Yeah.


Mike Ankers  19:30 

And, and I think and Sarah, you've used the words before, it's a noble business. In my past, and my family when we've run into issues along the way, our advisor's always been there for us. And so to remove that personal side of things is not something that resonates with me. So my last, I could close off this for days. It's so hard to summarize. I would say the last thing I would say is, is make sure that it's something that everybody's comfortable with. As a retiring advisor, you should feel good about it, and it should be a difficult but satisfying process in the end. And for those acquiring a practice, it should also be a difficult but very satisfying process in the end. And if the end client feels comfortable, feels well served, and the transference of trust, as Christina mentioned, that's how you measure your success.


Sarah Widmeyer  20:19 

Yeah, agree. Wonderful. Choosing the right successor is the most important decision for an advisor who's decided to transition their business. After all, it's your client's financial lives that will be affected for years to come. Whether you're planning a transition within the next year, or 10 years from now, it's never too early as Christina said, to start thinking about your succession plan. At Richardson Wealth, we've helped many advisors transition their business successfully. If you're an advisor looking to transition your practice, or are an advisor looking for opportunities to be a successor, please contact Mike Ankers at Mike.Ankers@RichardsonWealth.com. Conversations on Wealth is available wherever you get your podcasts. Remember to follow us on LinkedIn or Facebook for the latest on wealth strategies. Thank you all for listening. And join me again next time.