An Important Lesson 2020 Has For Financial Advisors

2020 brought a series of unexpected challenges and rapid change, not just in the financial industry, but across the globe. So often we speak of planning for the unexpected, and 2020 certainly put that idiom to the test. Still, many advisors aren’t taking the necessary precautions to protect their practices, even in the face of a devastating pandemic. Recently, we lived through an experience with one of our clients who, luckily, did have a plan in place for their practice and who, very suddenly and quite young, died from contracting Covid-19.

This is not an experience we wish on anyone. However, it did serve as an important lesson. One which we wanted to share, especially as we are currently working with his family to transition his practice to a new owner. That lesson is that you should have a continuity plan in place even if you don’t have a successor. For our Ameriprise Advisors, we developed something we call a Guardian Plan, which allows us to take over the practice and manage it in the event of death or disability, while we work with the advisor’s heirs to find a suitable successor and manage the practice sale. We hope that it something you never have to use, and that you get to be a part of the process of finding a successor and enjoying the rewards of your years of hard work. But we don’t get to choose how and when we meet our end. So just as you recommend that your clients plan for the unexpected, advisors too should have contingencies in place should they be unable to run their practice due to death or disability.

Again, in an ideal world you would have a successor named or at least be a part of the succession process, but if you are a solo advisor of any age, you must have something in writing that outlines what to do with your practice in the event of your death. It’s also important to have an accurate and current valuation done by a third party and update it regularly in order to protect your heirs and their inheritance. You wouldn’t let your client continue without safeguards and protections in place. Make sure you do the same for your practice.

Are you a solo advisor? Learn more about our Guardian Plan.

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