Staffing & Culture | 10.22.25

The 4 Stages of an Effective Succession Plan

by: Salmon Academy

I am always asked, “when should I start planning for my exit in the business?” My simple and direct answer is, “now.”  Do you typically ask about or tell your clients they need to have an estate plan? The same principle applies to you. In order to practice what you preach, you need to have your succession plan in order sooner rather than later. Why? Because you just never know. You owe it to yourself, your family and your clients to have your estate in order. And like your clients with their own estate plan, you can always change your timing or amend it, right?  But at least you will finally have one and feel much better about it too. Many tell me having a plan has given them peace of mind, regardless of the timing. They just feel better having one.

As you start thinking about exiting the business we know there are several challenges that are probably keeping you up at night, such as:

• How much longer am I going to be in this role?
• When do I start planning my exit?
• How do I determine the right person to take over my business?
• Once I've made that decision, when and how do I tell my clients?

Surely, you have other questions in mind, but I have found these are the top four. To address these questions, we dive in to a process the best of the best top advisors in banks, wire houses and independents have followed to create and execute on an exit plan.

1. Determining Timing

First, they got introspective — and realistic about how much longer they wanted to keep working. Here are some things to consider and think about: your health, your family, your stamina, the grind, the changes to the industry.

• Do you still enjoy the day-to-day of the business?
• Do you think about slowing down?
• Do you have the right partner or people on the team who can take over? If so, when do you think they will be ready?
• Are you ready to give up control?
• And, finally, why do you want to retire?  

Going through this catharsis will help you crystalize and flush out if you are truly ready to take that step. Next, put a defined timeframe on when you want to transition out of the business. For you it could be three or five years, or it could be 10 years. It does not matter, just give it as much thought as you need and make a decision and pick a date. Many advisors struggle with this first part. It’s emotional and tough. This is a big deal. This has been their life, but once they chose a date, everything else fell into place from here.

2. Choosing a Successor

The next thing the top advisors address is figuring out the right person to take over their business. Sometimes that is easy because they had the right partner or team. However, some may not have thought their partner was the right fit for their top clients, or they were sole practitioners. Here are some questions that you need to answer to figure out what’s right for you:

• If I were to leave the business today, who would I want to manage my money?
• Who do I know that runs their practice in a similar way, has the same values and provides a client experience like mine?
• Do I like this person?
• Do I get along really well with this person?
• Do I think they can maintain relationships with my current clients?

Again, there are other questions, but these are the basics to get you started.

3. Beginning the Transition

Once you know your timeline and have identified the right person, you need to start thinking about when to introduce them to your clients and how you will position them. How and when you communicate things to your clients is mission critical. You should begin introducing your clients to your successor two years before you exit the business.

The most successful transition starts with putting together a color-coded client list that looks like this:

• Green for the clients you think will 100% stay with the practice
• Yellow for the clients you think will 75% stay with the practice
• Red for the clients you think may not stay or know it will require a lot of handholding

Next, put that color-coded list into an Excel spreadsheet and create columns for:

• Driver’s seat
• Passenger seat
• Back seat
• Out of the car
• Date of review
• Status

For at least the first six months to a year, you should be in the “driver’s seat,” and your successor in the “passenger seat.” The color-coding, as well how the client relationship evolves with your successor, will determine when they move into the driver seat, when you move into the passenger seat, and ultimately out of the car. I recommend you formally review this document monthly with your team, and adjust accordingly.

4. Closing the Book (and Having the Conversation with Clients)

Finally, it’s time to have the conversation with your client. I recommend you do it in person if possible, but a Zoom or call will work instead. To be as personal as possible, I would not do it through a letter. Let the client know when you are leaving and explain why you chose your successor. The most powerful and impactful way to end that conversation is to say, “to put things in perspective, ___ will be managing my money too.”

Succession planning can be daunting, but if you follow this process, a seamless and gratifying transition is attainable.