Advisor: Succession planning is industry’s Achilles’ heel

Advisor: Succession planning is industry’s Achilles’ heel

Advisor: Succession planning is industry’s Achilles’ heel

“Despite a contrary belief, it can be done,” he said. 

What he’s doing with his two partners, and what he’s also helping to facilitate for others, is establishing agreements that force an advisor to purchase a partner’s shares with the untimely death of that colleague. 

“If anything happens to me, they are obligated as per the partnership agreement to buy my shares of the business at an agreed upon valuation and there is insurance in place to fund the purchase,” Pereira said. 

“If all three of us go at the same time (highly unlikely) then my family gets not only the insurance proceeds but also whatever the business gets sold for. I joke with my wife that if I go, hopefully I take them down with me to give her a bigger estate.”

And the model should effectively allow him to tap into a larger book of business, not only from older advisors, but others who he’s been able to consult on this path. 

“We are currently working with an individual advisor in her 40s, to be her succession plan,” he said. “We are drafting a document that gives us the first option at buying her book based on a set valuation and also spells out timelines an very basic term.”

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