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Planning for the next generation of professional services providers

3 min read

Modern Money

In 2011, the oldest baby boomers reached the traditional retirement age of 65, and through 2029, about 8,000 boomers will reach that milestone every day. This aging of America will result in a significant shift in mature industries such as financial services because the average financial planner is currently 57.

As they reach their “golden years,” many of these professionals, who have worked hard to build successful practices, will choose to leave them — ideally in the capable hands of colleagues who’ve been trained to step into their shoes. While there’s no substitute for experience, building a strong team and ensuring clients are taken care of over the long term are two responsibilities all professional services providers must take very seriously. In the midst of running a successful practice, succession planning may not be something high on priority lists — but it should be.

Identifying younger team members who fit the future leader mold is an important step for all practice owners. To excel as a professional services provider, people must:

  • Have the knowledge and technical expertise needed to make fiscally sound decisions on behalf of clients
  • Possess a high level of integrity along with a justifiable sense of self-confidence

In broad strokes, these professionals must have the ability to make clients feel comfortable, especially when they’re taking over for a veteran trusted adviser. This is when succession planning pays off: identifying people whose attitudes and skills are aligned with the goals and values of the practice, and creating an organizational environment that fosters team members’ growth and development.

What differentiates great teams? Here are five “people factors” that must be present:

  • Trust
  • Respect
  • Communication
  • Passion
  • Commitment

Once the right people are in place, the organization must be structured in a way that allows them to be successful. That means it should have:

  • A clear set of objectives
  • Metrics that allow team members to assess their performance
  • Ongoing training
  • Decision-making authority to reach goals
  • Team-based rewards and evaluations
  • An open culture where communication and offering different perspectives are encouraged

Baby boomer professional services providers who anticipate retiring within the next decade or so have a responsibility to look toward the future and ensure their practices thrive after they’re gone. By thinking about succession planning today, not only are practice owners doing what’s right for their clients and team members, but they’re also supporting the long-term health of their industry.

Clinical psychologist and executive coach Dr. Denise P. Federer is the founder and principal of Federer Performance Management Group.