Sound Off: How to Screw Up a Succession Plan

No one is immune, not even the industry’s best and brightest.

Consultant and author Simon Sinek points to a major business blunder increasingly seen. A particular company’s visionary founder turns the reins over to their operational chief because the skillsets are complementary and they always “get along so well.” Yet the operational chief, by nature, is not a visionary. They make the trains run on time and are often analytical, rather than creative. Once the pipeline that’s filled by the founder runs out, typically within about five years, the company begins its decline. One could argue it was the mistake Bill Gates made with Steve Ballmer, Steve Jobs with Tim Cook, Sam Walton with his heirs, etc.

But at least they named successors. The problems at PIMCO that arose from the Bill Gross mess continue to reverberate (see accompanying story). The TCW divorce from bond fund manager Jeff Gundlach resulted in an alleged movie-style chase from the building by company security, as well as a multi-gazillion dollar lawsuit and counter-suit that involved salacious allegations that won’t (can’t) be repeated here. Neither had an effective succession plan in place.

The size and scope of the 401(k) opportunity for retirement plan advisors continues to grow, driven by demographics and a desperate need for post-pension retirement security. Established advisors will begin to transition out. New retirement plan advisors are needed, and will most likely come from firms that specialize in other areas of the financial industry—who themselves are experiencing a shortage of next-gen talent. It’s a vexing problem with no easy answer, and demands attention sooner rather than later. So we’ll do just that; look for dedicated succession planning, M&A, next-gen career planning and business valuation content both in print and online in the coming months in 401(k) Specialist and www.401kspecialistmag.com.

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John Sullivan
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With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.

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