Firms in this year’s Regional Dealers’ Report Card feel proper succession planning is vital. But the best way to handle it, they say, is to allow their advisors to take the lead in devising their own retirement strategy.

“We encourage succession planning and we work with the advisors,” says Tim Price, president and CEO of Montreal-based MacDougall MacDougall & MacTier Inc. “But we typically don’t have a set plan. We tailor it, based on the circumstances of the individual.”

In fact, most dealers in this year’s inaugural Report Card have no formal plans in place to deal with succession, but are usually more than willing to help out their advisors, including offering purchase financing. The hands-off philosophy is in keeping with the importance the dealers place on advisor independence.

“Our advisors are like anyone who has a small business,” says Ken Parker, president of Calgary-based Generation Financial Corp. “They are encouraged to take a look at the value of their businesses and take steps to realize that value at an appropriate time.”

Generation does not offer its advisors succession planning support and has no plans to introduce any. Instead, the company expects each advisor to plan for the transition of his or her business to a successor.

“One of the things we have in the [advisor] contract specifically is that if the advisor hasn’t made other arrangements and he or she retires or passes on, then the clients become the clients of Generation,” says Parker. “What that has done is highlight to them that they need to put arrangements in place.”

At Saskatoon-based Sentinel Financial Management Corp. , advisors interested in scaling back or retiring are matched up with younger advisors by way of a buy/sell agreement.

“I just attracted a young advisor to Sentinel because I was able to match him up with one of our senior guys who wanted to get rid of a lot of his clients and keep just the top 10%-15% so he could semi-retire,” says Merlin Chouinard, Sentinel’s president and compliance officer.

Calgary-based Portfolio Stra-tegies Corp. is in the process of implementing a succession planning program and currently offers financial help for buying books of business. “If one of our advisors is retiring, we’d like to keep those assets within the firm,” says president Mark Kent. “So, of course, we would offer financial support for a person to buy that book,”

However, succession planning isn’t always something advisors want to consider, says Ross Sherwood, president and CEO of Vancouver-based Odlum Brown Ltd.

“You have to ask them if they’ve thought about it,” Sherwood says. “This industry’s like a drug. It’s a great industry, so a lot of advisors have never thought of leaving.”

Once an advisor decides he or she wants to retire, though, it’s important that the process of transferring clients from advisor to advisor be done carefully, Sherwood says. A fair price for both the buyer and seller, for example, has to be worked out, and clients need to be contacted. “The only asset we have is our client base,” Sherwood says. “We try to get the advisors to go through a process so that it works for everyone involved.”

However, this process could be hampered by the fact that the majority of regional dealers prefer to recruit experienced advisors rather than develop and train recruits.

Seasoned advisors are preferable, the dealers say, because they come with financially stable businesses, relevant experience and don’t require much hand-holding. And as a group, the dealers do not appear to be worried that the average age of their advisors is 49, consistent with the industry average.

“We bring people on in their 30s, 40s, and 50s, so that you have succession planning in the sense that you have another age group with the ability to take over in time,” says Robert Harrison, president and CEO of Vancouver-based Leede Financial Markets Inc.

“There have been occasions in which we’ve hired people new to the industry, but that’s not our emphasis,” says George Aguiar, president and CEO of Toronto-based GP Capital Corp. “We don’t have the infrastructure to support that.”

GP Capital tends to attract seasoned advisors, he says, some of whom may have become disenchanted with the banks or larger dealers.

At Odlum Brown, the focus is also on experienced advisors, but the firm does hire a rookie class every year as a way of bringing new blood into the industry. “It’s not large, but it’s important,” Sherwood says.

@page_break@Generation’s Parker says that the investment advisory business is ideally suited to someone in mid-life who has built up experience and contacts in another field and who is looking to make a career change.

“The advisory industry is inherently very interesting,” he says. “If approached correctly, it’s an opportunity to provide a very important service.” IE