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Succession plan is key before retirement

Financial planner Mark Snyder, 65, is not ready

Financial planner Mark Snyder, 65, is not ready to retire, but he knows it's time to craft a succession plan for his Medford business, Mark J. Snyder Financial Services. (Sept 25, 2012). Credit: Newsday / J. Conrad Williams, Jr.

For nearly 30 years Mark J. Snyder has preached the importance of planning to clients. But much as the cobbler's children have no shoes, at 65 he is without a succession strategy for his financial planning company.

Though Snyder isn't ready to retire anytime soon, he looks forward to a time when his days will be his -- whether spent reading, golfing, swimming, volunteering, traveling or just relaxing. Trouble is, he hasn't ventured much beyond that -- like setting a retirement date or analyzing what would happen to his clients and staff of 10. He has a death-and-disability buyout agreement with two financial planners. In the event of his death or disability, they would take over the Medford company until a suitable person is found to run it. This plan, he says, is for an emergency, not a permanent solution.

He has two grown children, neither of whom is interested in the business. There might be a potential successor among his staff. Snyder's certain he doesn't want to sell out to a consolidator. "I have no strategy," he says. "I'm looking at what people come to pass. I'm not aggressively pursuing anything. I'm keeping my eyes open."

Planning for the future

Snyder isn't unique. According to Pershing's Advisor of the Future study, at the end of 2011, only 34 percent of advisers polled had a full succession plan in place, even though all those surveyed were within seven years of retirement.

Parting with a business built from birth is no small emotional matter. "Because the business is their lifeblood, their identity, for many, taking action doesn't happen until late in the game," explains Scott Slater, managing director for business consulting services at Charles Schwab Advisory Services in San Francisco. Ideally, succession planning begins at least a decade before departure. Procrastination means fewer options.

One of Snyder's big concerns is finding someone with an investing philosophy that mirrors his. "They have to be low-key. I don't push people into anything," says Snyder, who wants his clients to get the soft touch he gives.

He recently attended a conference that included a seminar on succession planning. It got his attention. He plans to follow up with the speaker for more. That's a good idea. He's behind the curve, says Ray Sclafani, founder of ClientWise, an executive and business coaching company in Mount Kisco.

To get going, start with the future. "What are his goals? Put them on paper," says David Canter, executive vice president and head of practice management at Fidelity Institutional Wealth Services in Boston. There are three key questions Canter says Snyder should ask himself: Does he want to sell his business and move on; merge with another practice but stay involved; or prepare someone in-house to take the reins?

According to Schwab's research, 80 percent of financial advisers prefer that someone on staff take over. If Snyder goes this route, he should begin developing talent now. "If not, he may be left having to sell or merge," says Slater -- worse still if the timing is lousy. "You don't want to be a victim of the market, just like you wouldn't want to sell your house in a fire sale," says Kim Dellarocca, director of practice management and global marketing at Pershing in Jersey City.

Focus on clients, growth

Clients are the priority. "What will his clients need in the next five to seven years and as they grow older? Succession planning is about the clients' needs," Sclafani says.

A succession plan consultant, or officials at Royal Alliance Associates Inc., the broker-dealer Snyder's company is affiliated with, can offer objective insights. Sclafani recommends he find three to five advisers who have taken different paths -- perhaps one brought in a son or daughter, another hired a chief operating officer who was groomed to be CEO, another merged with a bigger company. "He needs a thought-partner to be a sounding board, to help sift through options and priorities."

Succession planning is essentially growth planning. Thinking ahead makes a business better today and tomorrow. It's "not something you leave to chance," Dellarocca says. "How do you want to be remembered by your clients, by your staff?"


Company: Mark J. Snyder Financial Services, Inc., in Medford

Owner: Mark J. Snyder

Founded: 1984

Employees: 10

Assets Under Management: $250 million

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