Sep 19, 2018
During this installment of The Confident Advisor Practice from
the Horizon Advisor Network, hosts Bill Bush and Pete Bush
interview Dan Mayes, SVP Succession Planning and Business
Acquisition at Cetera Financial Group. They define and
discuss continuity and succession planning. They also define
4 common challenges that advisors face with succession planning as
well as a process for creating a plan. The episode concludes
with an overview of Cetera’s new “Legacy Builder Program”.
Time Stamped Show Notes:
- 00:54 – Defining what “continuity” is: how your business
continues in the event of an unplanned circumstance such as
disability or death.
- 01:07 – Defining what “succession” is: how your business
continues in the event of planned circumstances.
- 01:25 – Introducing guest Dan Mayes from Cetera Financial
- 02:19 – Dan Mayes introduces himself and talks about his
current career role and background.
- 03:03 – Dan has been involved in over 300 transactions of
practices changing hands.
- 03:49 – Since 2015, this type of transaction exceeds $43
million in GDC/Gross Revenue.
- 04:24 – Pete points out how valuable this podcast discussion is
for practice owners.
- 05:45 – Dan talks about the state of the industry relating to
continuity and succession.
- 05:47 – Continuity planning relates to an unplanned exit (death
- 05:56 – Succession planning relates to a planned exit
- 06:10 – Dan introduces “business acquisition” as the buy-side
of these transactions.
- 06:15 – Continuity, succession and business acquisition are
related, but need to be looked at separately.
- 06:45 – At Cetera, 30% of advisors report having a written
continuity plan in place.
- 07:48 – Pete points out that many people might think that
having their children in the business or having had conversations
will constitute a continuity plan.
- 08:20 – Dan explains that verbal agreements are unenforceable.
Written documents are crucial
- 08:54 – Discussing the “graying” of this industry
- 09:00 – The average advisor at Cetera is just under 60 years
old and industry average is in the mid 50s. This means that the
need for continuity planning will increase over the next 5-10
- 11:01 – Dan references the challenge of creating a career path
and profession for the next generation.
- 11:17 – Defining and discussing the challenges that advisors
talk about in assembling a continuity plan.
- 11:30 – Financial Planning Association Article – 4 challenges
to succession planning.
- 11:48 – Strategic: who is the right successor?
- 11:59 – Personal: what am (the advisor) going to be doing in
- 12:09 – Structural: how to optimize your business for
- 12: 21 – Mechanical: paperwork, agreements and
- 13:19 – Solving the “strategic” challenge is typically the most
- 14:28 – Discussing advisors evolving into an emeritus role as
part of a succession plan.
- 15:52 – What are the other 70% doing about succession? They’re
actively thinking about it and are often too busy to address
- 16:42 – Creating “mental images” of what retirement goals would
be (starting a charity, 2nd career, etc.)?
- 16:59 – Defining a timeline to give us time to effectively
- 17:40 – A reasonable timeline for succession planning is 3-7
- 18:28 – What are some of the potential issues/problems to be
- 19:28 – Regulatory: are both buyers and sellers appropriately
- 19:58 – Price: Deal structures and tax implications are often
unique. Seeking support from tax and legal advisors.
- 22:12 – Discussion maintaining consistent culture from seller
to buyer (from client standpoint).
- 23:03 – Introducing and understanding process for developing a
- 23:26 – Defining goals (as buyers and sellers).
- 23:57 – Analyze financial resources for the seller’s new
lifestyle in retirement.
- 24:23 – Design a plan based on resources and filling gaps by
- 25:05 – Implementing over time – more time equals more
- 25:15 – Tweaking and adjusting plan over time
- 26:23 – Discussing Cetera’s “Legacy Builder Program”
- 27:16 – Cetera assurance for continuity, but still encouraging
proper succession planning.
- 28:28 – Concluding Dan’s interview with a clearer understanding
of how Cetera’s services benefit advisors who need succession and
3 Key Points:
- Continuity planning relates to unplanned “exit” (death or
disability) while succession planning relates to planned “exit”
- 30% of advisors have documented continuity/succession plans. It
is advisable to establish your plan 3-7 years in advance.
- Cetera is launching a new “Legacy Builder Program” which will
promise to buy advisor businesses in the event of an unplanned
death or disability. However, this program ALSO allows advisor
businesses to develop succession plans for planned sale or
- “Dan Mayes from Cetera Financial Group is the go-to-guy in
helping advisors think through continuity and succession.” – Pete
- “While I should celebrate that 30% [of advisors] have a plan,
I’m also worried that only 30% have a plan.” – Dan Mayes
- “You’re going to be exiting this industry at some point in the
future. The question is are you going to control that process?” –
- “If we don’t know our destination, how can we design a path to
get there?” – Dan Mayes