Succession planning is one of those things that often gets pushed to the back burner—until it’s almost too late. Are you running a family business? Perhaps you’re thinking about transferring your wealth to the next generation. You need a financial advisor for succession planning if you want a solid plan in place.
Without one, you could risk exposing your assets or business to uncertainty.
This is where a financial advisor for succession planning comes in. With their expertise, they can help maneuver the complex nature of succession planning. A succession planning consultant ensures your business or personal wealth transition goes smoothly. From strategic tax planning to risk management, a financial advisor offers the insight you need to protect your legacy and ensure it passes without a hitch.
What Are Succession Planning Services?
Succession planning is deciding how your business, assets, or wealth will be managed and passed on when you retire, step down, or pass away. It’s a contingency plan and involves more than just naming a successor; it does the following:
- ensures continuity
- protects the value of what you’ve built
- reduces disruptions during the transition
When you’ve built a business, especially as a family-owned or privately held company, you want it to thrive under new leadership. If you don’t have a well-structured plan, your business can suffer from:
- leadership gaps
- operational issues
- internal disputes
- conflicts over asset distribution
- or even fail entirely
Succession planning services leave the right people to take over, preserving your vision and legacy. You want to ensure you have employees who can take the mantle when you’re not there. Or maybe you want to pass down your business to your children.
For families with significant assets, wealth succession planning helps ensure a smooth transfer to the next generation. It reduces the risk of disputes among heirs and can also help reduce tax burdens.
Proper succession planning prevents these issues by outlining a clear process and avoiding unwanted surprises. Knowing that your legacy is secure and protected for the future brings peace of mind.
How a Financial Advisor Supports Succession Planning
Financial advisors for succession planning give you a holistic view of your business. Their expertise helps you overcome financial, legal, and tax-related challenges to protect your business and personal assets.
Here are some the critical succession planning services that financial advisors may offer:
- Business Valuation: Ensuring your company’s worth is accurately assessed for sale, transfer, or inheritance purposes.
- Estate planning: Working with lawyers to establish the best legal structures for your estate.
- Risk management: Assessing potential financial risks and creating solutions to safeguard wealth.
- Tax Planning and Optimization: Leveraging strategies to reduce tax liabilities. Financial tools include trusts, family limited partnerships, or charitable donations. This ensures more of your wealth stays with your heirs or within your business.
- Retirement Planning for Successors: Ensuring your successors are secure and ready to take over.
- Insurance Planning: Using life insurance or key person insurance to cover financial risks and ensure liquidity for your business or estate.
- Exit Strategies: Helping business owners prepare for an eventual sale, merger, or transfer to new leadership.
- Independent Asset Management: Structuring the transition of family businesses to ensure smooth leadership changes and avoid family conflicts.
What Kind of Business Needs Succession Planning Services?
Succession planning services aren’t a one-size-fits-all solution. You might think that a small family business doesn’t need one. However, every business and individual has unique needs; this is where financial advisors for succession planning truly shine.
They offer tailored succession planning services to meet specific situations. They can help if you’re a business owner, a registered investment advisor (RIA), or a high-net-worth individual looking to transfer wealth.
Let’s look at these use cases:
RIA Succession Planning
Registered Investment Advisors (RIAs) face unique challenges regarding succession. A financial advisor can help plan for smooth transitions that protect both clients and the firm’s value. RIA succession planning needs to cater for:
- finding suitable successors (internal or external)
- structuring buyout agreements
- managing regulatory requirements
- create a seamless transition for notifying clients and all stakeholders
Family Wealth in Succession Planning
Succession planning isn’t only about your business assets. You want to make sure your personal assets are managed properly as well. If you have large assets, wealth succession planning ensures your financial legacy is passed according to your wishes.
Financial advisors for succession planning work on creating trusts, wills, and other tools that minimize taxes and legal issues. They also ensure that your heirs are well-prepared to manage their inheritance, including education and support for future generations.
If there is a lack of confidence in the leadership of your business, this can erode your intergenerational wealth. The value of your company could decline because transitions can be rocky periods without guidance. Having a succession planning consultant can give you an objective third-party to handle the situation.
Large Companies and Succession Planning
Succession planning for large entities may involve a board of directors, creating more challenges. Boards sometimes face conflicting interests between stakeholders. They prioritize short-term business goals over long-term succession strategies.
Finding consensus among board members on the best candidate for leadership can delay decisions. Business succession planning with financial advisors can ease these problems. As an independent third-party, a financial advisor can establish procedures to avoid bottlenecks.
In cases where succession planning isn’t proactive, companies risk losing stability when a CEO or leader leaves. This can also affect shareholder confidence.
Who is Responsible for Succession Planning?
The responsibility of succession planning lies with the business owner or leadership team. However, it’s best to get advice from succession planning consultants, financial advisors, legal experts, and tax professionals. An expert team can make your transfer of wealth in succession planning smooth.
Plan for Long-term Financial Success
You won’t be around to manage your business forever. You may step down for retirement, pass away, decide to pass the baton to your children. Let our team of financial advisors help you manage risks and give you the best outcomes for long-term success.
Plan your future with Asset Preservation!
Stewart Willis is the founder and president of Asset Preservation Wealth & Tax, a financial planning firm in Phoenix, Arizona. Investment advisory services offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser.
The commentary on this blog reflects the personal opinions, viewpoints and analyses of the author, Stewart Willis, providing such comments, and should not be regarded as a description of advisory services provided by Foundations Investment Advisors, LLC (“Foundations”), an SEC registered investment adviser or performance returns of any Foundations client. The views reflected in the commentary are subject to change at any time without notice. Nothing on this website constitutes investment, legal or tax advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Personal investment advice can only be rendered after the engagement of Foundations for services, execution of required documentation, including receipt of required disclosures. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Foundations manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Any statistical data or information obtained from or prepared by third party sources that Foundations deems reliable but in no way does Foundations guarantee the accuracy or completeness. Investments in securities involve the risk of loss. Any past performance is no guarantee of future results. Advisory services are only offered to clients or prospective clients where Foundations and its advisors are properly licensed or exempted. For more information, please go to https://adviserinfo.sec.gov and search by our firm name or by our CRD # 175083.
