Succession plans are rare in the advisory segment; so finding a successful case study can be a challenge. One advisor explains how he designed a process that gives him more free time and doesn't leave clients in the lurch.
Succession plans are rare in the advisory segment; and good case studies are hard to find. Lionel Coleman, a senior financial advisor with Assante, tells Wealth Professional how he designed a process that will give him more free time, but won’t leave clients in the lurch.
“When you reach a certain age you start to think of other priorities like travelling and doing other things,” Coleman told Wealth Professional. “So a few years I started to think about succession and retiring.”
Initially, Coleman had hoped to pass his practice on to this son – a process that’s fairly common among advisors – but this proved not to be possible. “About 16 years ago, my son joined me in my business but after 12 years he decided to move out to British Colombia and hasn’t come back,” said Coleman. “I picked up his business, but then about five years ago I decided I needed an alternative succession plan.”
Restrictions on selling the book prevented Coleman from looking outside of Assante for potential buyers, but as demand remains high, he had no trouble getting offers. In addition, he noted, he had support from top executives in the process.
“I had spoken to our president Steve Donald and he spread the word: within a very short period of time I had eight or ten calls from other Assante advisors around the GTA [Greater Toronto Area] and all of them wanted to buy my business.”
Client and staff focus
When selling his book, Coleman was keen on making sure that both his clients and his colleagues were taken care of.
“My first priority was to look after my clients: I wanted them to have an advisor who shared my values and would fit in well with my clients,” Coleman said. “Also, as a branch owner-manager I had eight other advisors working with me and I didn’t want to leave them in the lurch. A lot of the potential suitors were from branches in Thornhill and Mississauga and other places, and they simply wanted to buy the book of business, take it to their office and leave my branch high and dry.”
This meant that the best option would be to bring in a partner who would continue as the manager of the branch as well as his clients’ assets.
“Fortunately, I found and advisor with another branch and he was entrepreneurial in thinking and wanted to become a branch owner and manager.”
Slow exit
Coleman selected fellow advisor Nino Pannozzo to initially be his partner, and later his successor
“I made a deal with Neil about three and a half years ago where he would move from the other Assante branch where he was to my branch, work with me, and gradually take over my clients,” Coleman said. “Also, we set up a jointly owned management company to take over from my management company which had been operating the branch for 17 years.”
That 50-50 venture now looks over the running of the branch and the supervision of the other advisors.
This joint-venture agreement has been in place for over three years, during which Coleman has transferred about 50% of his clients Pannozzo, with a tranch of his clientel being introduced each year in a guided process.
“I speak to my clients by calling them or having a meeting. I explain that I am reducing my involvement in the business, because I want to travel with my wife, but that I am still remaining active in the business and will be keeping in the office,” Coleman said.
“I tell them I have chosen Nino Pannozzo as the advisor whom I believe is best suited to work with them: we’re both chartered accountants, we’re both certified planners, and we share the same style," said Coleman. "We’re not sales oriented but are consultative in our approach. So I think he’d be a very good fit.”
Coleman introduces each client to Pannozzo through a joint meeting, after which business is handed off. To ensure a smooth process, he will still check in with former clients when he sees them at the office. “When they meet with Nino, if I’m in the office I will pop in and ask ‘how’s the family?’ and that sort of thing.”
The slow process is beneficial for Pannozzo, as it ensures high client satisfaction and retention. For Coleman, it also means he retains some income from former clients.
“Of course there is a sharing of fees and there is a financial aspect to this as well, and there is a process over time where the fees are shared with Nino and myself,” said Coleman. “But after a time I’ll drop off and all the fees go to Nino.”
Although Coleman is enjoying partial retirement and extra time for travelling, he does not yet have a clear timetable for full withdrawal. “For now, I feel fit and I’d like to continue; I’m not going to sit in a rocking chair,” he said.
