Crafting a successful exit strategy: insights from a veteran financial advisor

Former advisor shares her experience of exiting from her practice, and why a successor exactly like you may not be the best choice

Crafting a successful exit strategy: insights from a veteran financial advisor

With a remarkable decades-long record of success as an investment advisor, Christine Timms had plenty of reason to stay in the industry. But once she started thinking about making her graceful exit, Timms knew it would be the right decision.

“I’d already practiced for 33 years, and I loved it. But I was feeling pressured for time,” she told Wealth Professional. “I wanted to get into writing my books for advisors and the general public. My mother was 90 years old and needed more attention, and I also had a wonderful husband and a son in high school that I wanted to spend more time with … I felt like I was being spread too thin.”

At that point, she was just turning 60 – the very number she’d had her sights on as she started developing her retirement plans years before. She also felt financially secure (why wouldn’t a financial advisor build up a healthy nest egg?) and had good successors in place to take over her practice.

Ten years, three successors

While Timms’ final steps toward retirement took a year and a half to execute, her plan to exit from her practice was actually a decade in the making. To ensure continuity for her clients, she had built a team with senior members assigned to have direct relationships with a third of her client base of more than 300 households.

“It was a great way to serve clients. The client had two contacts: me who they’ve known forever, and this very qualified professional who had a more in-depth knowledge of their details and situation.

“The reality is that clients become very dependent on their advisors. They trust you, but they’ll also be asking ‘What happens if you’re just all of a sudden not here?’ So you’re helping them feel better about that,” she says. “You’re also laying the groundwork for them to understand that when you retire, that other person will be there for them.”

But as they say, even the best-laid plans go awry. A year and a half before the planned retirement date, one of her associates left the business and moved to Bangkok. Thankfully, the clients he was working with already knew the other two from Christmas cards and various interactions, which helped as Timms reassigned those relationships.

“My clients knew I had three senior team members, and they had one main contact,” Timms says. “If I hadn’t structured my practice that way, it would have been much harder.”

Succession planning pro-tip

In the seven years since her retirement from her practice, Timms has authored several books on practice management for advisors, as well as checklists and other resources to help advisors. She’s also currently working on a book to help everyday Canadians.

For advisors who might be considering their own retirement and looking for successors, Timms has one key piece of advice.

“Instead of someone exactly like you, find an advisor who will carry on like you would have if you continued in the business,” she says.

“There are a lot of advisors out there who haven’t made the switch to fee-based compensation, because they’re going to be retiring soon and it would take too much effort for them,” she says. “We have more advisors with discretionary powers in the business than we used to. … There’s more financial planning now, and more virtual meetings.

“As a retiring advisor, ask yourself: ‘What should I be thinking about doing if I’m still here for the next 10 to 15 years?’ That’s the kind of thing you want to see in your successor,” she says. “Maybe that person should do things differently from what you’re doing now, so you need to be there to endorse their approach to your clients as necessary in the evolving world we live in.”