Succession planning: how to do it right

Smart practice

Tuesday 08 November 2016

Executing the perfect succession plan: how one wealth business got it right

When wealth manager Robert Lipman contemplated his retirement, he knew he needed a sound succession plan to continue to deliver excellent client service to his loyal investors. When an opportunity to acquire the wealth management arm of Investec arose in 2011, Lipman took steps to implement that plan.

This process included lifting the profile of key team members, high-level client communication and the engagement of external consultants to ensure a smooth transition.

Succession tactic #1: make key staff more visible to clients

“If you’re an advice firm that’s invested in your people, you should showcase the talent of your firm to your clients,” says Lipman, Burgon and Partners Managing Director, Paul Burgon, “and over time they will grow to trust those new advisers.” The company, renamed in November 2015 to reflect its changing of the guard, is a boutique, independent wealth management company that services the needs of high net worth clients.

Burgon is in the process of taking the reins from Lipman and the pair have been working on a meticulous succession plan for the last five years. A critical part of that plan is making long-term clients comfortable with other financial planners in the firm.

Burgon became equity partner when Lipman acquired the wealth management business from Investec. They took over the Australian financial services license and opened an office in Sydney. Many long-standing clients followed them.

In terms of long-term goals for succession, the pair want to continue to grow the firm, possibly reaching into Melbourne and Brisbane as well as expanding the Sydney team.

Lipman has reduced his time in the office to three days a week, pursuing interests in photography and golf on his days off. “Succession really started on the day I decided to offer Paul the opportunity to come in with me, and to become a major equity partner,” Lipman explains.

“Paul’s roughly 20 years younger than I am. I realised then, on day one, that in this transition process our clients would want to deal with someone who’s going to hopefully take them through their retirement years and beyond.”

However, he’s quick to counter, “we’re not changing the process. We’re not changing the way we construct portfolios, we’re not changing the way we service our client base, we’re not changing the values system that’s been in place for a long time. All those things will remain constant.”

One of the challenges that young people face when coming into the financial advice industry is to have credibility with the older client base.

Succession tactic #2: mentor team members for long-term growth

While he continues to service some 100 clients, Lipman has focused his lens on training and mentoring younger members of the team. To retain and mentor millennial talent in this lean team of 13 is a priority. “I don’t feel old in the sense I’m past my use-by date,” he says. “It’s opportune to spend more of my time building up others, to hopefully see this business go on to succeed in the future.”

“We do regularly catch up with all of our staff and help track their career,” Burgon adds. “We hope we can offer millennials a fantastic career at the firm.” Every associate hire is potential partner material.

“One of the challenges that young people face when coming into the financial advice industry is to have credibility with the older client base,” Burgon says, adding that one advantage of a boutique firm is the access to high net worth investors that goes with the small staff. “The opportunities for progression are tremendous,” Lipman adds. “People learn at a much faster rate, they get access to meetings they wouldn’t otherwise get in larger firms. And they interact with fund managers and people who supply us with research.” 

This investment in staff and the attention paid to nurturing their individual goals has paid dividends in a very low churn rate. Lipman’s one-on-one mentoring sessions remain confidential, and address more than purely professional goals of team members.

Succession tactic #3: define the way forward

The question of succession also provided an organic opportunity to address issues of their vision for the future. The business will continue operating as a classic wealth management company.

Despite trends towards convergence of accountancy and wealth management, Lipman and Burgon are firm on what they stand for. “One result of our partnership is that we now have two main areas of excellence. We have excellence in investment management because that’s been a passion of Robert’s for 20-odd years. And I feel I’ve been able to bring an excellence in investment structure,” says Burgon, referencing his experience in tax strategy.

Succession tactic #4: clear communication

The response from clients so far has been positive. A front-footed communications strategy adopted from day one offered an open-book mentality that has meant no nasty surprises. Early in the process, they engaged Apollo Communications, as well as their external graphic design team, to join a visioning workshop, where their core values were defined: Honesty, accountability and tenacity. These will remain constant into the future, providing stability during a period of change.

The idea was that everyone would understand their vision, in order to clearly articulate how it impacts clients and staff alike.

Because Lipman intends to maintain regular time in the office over the next few years, there’s the opportunity to make clients comfortable with new consultants while retaining established client service managers, many of whom have been in place more than a decade.

With an average client age of just under 70 years, the growth strategy is necessarily divergent from what it might be if clients were from a different demographic. Part of the plan moving forward is management of investments for those who inherit their current clients’ wealth.

While they do engage in some contemporary communications practices with younger clients, video-conferencing and email communication aren’t routinely used for older clientele. And robo-advice is not a tool used by the firm. “We’re across it but millennials are not our core clients,” says Burgon.

One area where they do see the benefits of technology is in the effort to reduce paperwork. In terms of process, Burgon says, there’s the need for a single-overview portal where clients can view their various accounts in one place, as well as a vault for all their estate planning documentation and powers of attorney.

“This technology is something we’d embrace once we got comfort around the security of our clients’ information,” Burgon explains. While they’re not going digital yet, the intention is to stay across developments, so they’ll be ready to strike when they feel comfortable with it.

Succession tactic #5: work the work-life balance

Looking to the future, work-life balance is an enduring question for both Lipman and Burgon, as well as younger staff. Burgon is quick to affirm that he supports staff members’ commitments to balance work as part of a successful life. “I think people have realised that just having success in your professional life is not a level of success across your life,” he says. “You have to have success professionally and personally. That’s being acknowledged more and more by the millennial generation.”

With the extra responsibilities of management, as well as servicing clients and future planning, Burgon concedes he’s grateful for a supportive family but that it’s sometimes a battle to retain the same balance for himself that he encourages in his staff.

He’s even considered engaging his own professional coach, and earmarks at least two days in every month when he clears his calendar of client meetings. These days are dedicated to working on the business, rather than in it. And at the beginning of each year, Lipman and Burgon take time out to address goal-setting, to ensure the company remains on track.

But the hard work and dedicated hours have been worth it. “There’s no reason for Paul and I to feel a sense of anxiety or pessimism at the outlook,” says Lipman. “The opposite is true. We’ve done everything we possibly could to allow for a smooth succession. Paul to his credit did a lot of work in researching the best succession plans that have been adopted in the industry, prior to us appointing external consultants. We knew what we wanted, and we did a lot of work to hire what we felt were the best people to work with us to make sure this process actually worked. It’s early days but it does appear to be working.”

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