Internal vs. External Succession: Choosing the Right Path to Exit

Should you sell your practice to someone on your team or roll it up into a larger firm? In this episode, Tyson Ray and Kim Cochenour dive into the emotional, financial, and cultural tradeoffs of internal vs. external succession planning. If you're looking for clarity on one of the most personal decisions you'll ever make as an advisor, this conversation will give you the questions, cautionary tales, and insights you need before making your next move. This episode revolves around one of the most personal decisions every advisor faces: "Should I sell my practice to a team member or roll it up into a larger firm?" Tyson kicks things off by listing what's really at stake when an advisor is thinking about their exit strategy: their clients and relationships with family and friends that have entrusted them with their life savings. Tyson goes into why part of this internal-external decision isn't waiting for you to do your succession, and the role your team plays. The right decision, beyond the money and the business, is the relationships you've built with clients and that they can be better off with the succession decision you made. A pro of an internal succession is that you have all the time you need, you're not having outside influences, demands and stresses – you basically get to set all the terms. A con of an internal succession? "You have unlimited options!," says Tyson. If you're considering an internal succession just know that you're likely going to get less than what the markets are paying for practices… A positive of an external succession is that decisions are going to be made for you because the buyer is going to dictate what they're willing to offer, and you have to accept – or decline – that. Tyson and Kim touch upon potential culture clashes and the role of a leader who can replace you at the helm of your firm. Not sure about doing an internal vs. an external succession? Tyson suggests exploring both routes, while having an honest conversation with yourself. A common mistake Tyson sees advisors make is to anchor on one option without knowing what the other looks like. Tyson shares a mistake he made, while Kim lists a few key questions every advisor should ask themselves as part of their succession planning. Kim invites you to ask yourself this: "If I wasn't in the office tomorrow, would my team and clients know what to do?" Replacing you as the head of the firm may require more than just one person – Tyson shares some insights on this aspect. Tyson loves the fact that financial advisors like to advise. "They're more than willing to help and share their experience with you, you just have to reach out and ask for some help," he says. Mentioned in This Episode: TotalSuccession.com TotalSuccession.com/podcast FORM Wealth Advisors Tyson Ray Kim Cochenour