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  • by Randy Magdaluyo

Planning for Your Firm’s Long-Term Future

Whether you’ll be ready to retire in 30 years or three, it can be crucial to have a succession plan in place so you can ensure your clients’ needs are taken care of well into the future. The earlier you start planning for this transition, the better. There are several strategies to consider and finding the one that works best for you and your firm can take some time—but it should be well worth the effort.

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Internal Succession

The first option most RIAs consider is for someone within their organization to succeed them after they retire. If you already have a younger advisor within your firm who is up for the task, this may seem like the easy choice. Even so, it can take time and effort to work out the logistics. Never assume that you and your intended successor are on the same page. Sit down and have a one-to-one to go over their plans for the future and how your firm fits into their vision.

If you don’t already have someone lined up to take over your position as head of the firm, start searching now. It could take 10 to 15 years to not only find a successor, but also begin the process of training them, sorting out the legalities, and preparing clients. Sometimes, it’s best to look for a team of candidates who might be suitable, rather than putting all of your stock into one candidate and then finding out down the line that it won’t work out.

To make the position attractive to your candidate(s), be willing to make an investment now. Giving up a little control of the company (for instance, by partially transferring ownership interest) can give your candidate(s) a long-term incentive to stay and develop the business. As you get closer to retirement and begin to pinpoint your successor, you can give that person more control (and more ownership interest in the company, if applicable).

Joining Another Firm

If you are the sole owner of an RIA firm or have few partners but no internal successor(s), an alternative succession option is to join another firm. For many RIAs, this is an attractive option that allows them to ease into retirement with less worry and responsibility on their plates. Rather than searching for a successor, joining another firm allows you to focus solely on your clients until you decide to retire.

Find a firm that you respect and vice versa. If possible, choose a firm that can offer extra value to both your clients and staff, such as:

• Additional service offerings
• Updated and/or easy-to-use technology
• More robust marketing, business development, and client service capabilities

Merging Your Firm

If you’d prefer to join forces with another firm that offers complementary services rather than competing until your retirement, a merger may be the right succession plan for you. Pick a firm that not only shares your values and can be a good fit for your customers but will also be a good fit for your employees. Don’t look at cultural differences as a bad thing. Use these differences as learning opportunities and work to bring the best parts of each culture together. Of course, if your two cultures are wildly different, a merger may not be in the best interest of either firm, but you should be able to come to a compromise when it comes to small differences of opinion.

When you’ve chosen a firm to merge with, it’s important to collaborate openly with one another. Each firm should have representatives who can come together to iron out the details, such as:

• Which technologies to use
• How to manage your physical space
• Hardware, software, and furniture needs
• Benefits and compensation

No matter what succession method you choose, be sure to communicate thoughtfully with your clients about this next step in your career. Consider involving select clients and other stakeholders in a strategic planning committee or advisory council. Being thoughtful about your choices could help ease their worry and may help you continue working with them for years to come.


1. Friedman, E. “The big succession planning questions RIAs need to answer immediately.” InvestmentNews. March 13, 2015. Accessed at http://www.investmentnews.com/article/20150313/BLOG09/150319950/the-big-succession-planning-questions-rias-need-to-answer-immediately

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