Shifting your business to a successor takes years of planning — even when you intend to keep working a few days a week.

“Transitioning a book of business is a challenge,” says George Hartman, president of Market Logics Inc. in Toronto. You must be careful to make the process easy for yourself while retaining clients and, therefore, the value of the business.

When Mark Farris, director of wealth management with Richardson GMP Ltd. in Calgary and his team bought a practice from a retiring advisor a year ago, the transition took almost two years.

Follow this expert advice from Hartman and Farris’ experience to make a smooth transition into retirement:

> Do your homework
Take time to research potential candidates to find the best fit for your practice.

Look for someone who shares your values and business philosophy, says Hartman. You want someone who will give the same client experience, not just the person offering the most cash.

Farris was interviewed along with other Richardson teams by the retiring advisor before she made a finally decision.

> Map out your exit strategy
Plan out the transition once you’ve decided on a team.

Decide whether you will leave immediately or continue you to work but with reduced hours and number of clients.

Be cautious of keeping your top clients when you enter semi-retirement, Hartman warns. These are often the most profitable group and so you can actually reduce the value of your practice if you take those clients out of the deal.

A year before Farris officially bought the practice, he moved his team and the existing advisor into the same office. By working together he and his team could observe how the retiring advisor dealt with and communicated with her clients.

As well, both teams evaluated their practices to see if they could be streamlined. Farris’s team had 200 client households while the retiring clients 100, for a total of 300. They moved 60 clients to another Richardson advisor, leaving 240 clients for Farris.

> Inform your clients
Tell your clients about the retirement as soon as possible.

“Communicating to the clients that [the retirement] is happening is an important exercise,” says Hartman. “If it can start a year in advance, that’s better.”

Farris and the retiring advisor used joint newsletters, presentations and one-on-one meetings with clients to introduce Farris and to address any concerns.

When you reduce your hours and number of clients, some clients may resent you for passing them off to another advisor. In those instances, Hartman says, emphasize the better service the client will receive with the new advisor. Tell them you won’t be keeping as up to date and can’t provide the level of service they’re used to.

>Get it in writing
Avoid headaches by having a written, signed document for buying the business well in advance.

Farris and his team bought the retiring advisor’s business on trust and didn’t sign anything until the process was almost finished. In future, however, Farris says he would write out and sign a document at the beginning to make sure no one changes his or her mind.

IE