An Older Advisor Does Something Unusual: He Creates A Succession Plan

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Gary Schwartz, founder and president of Madison Planning Group in White Plains, N.Y., has solved the succession planning dilemma for his 22-year-old firm. He groomed his two sons to take over.

Schwartz, 64, said he is not necessarily ready to retire right now, but he prepared for the future, unlike many older advisors.

Succession planning ranks ninth on RIAs’ list of priorities, according to Charles Schwab’s 2019 RIA Benchmarking Study released in July. Several studies have shown that RIA owners and founders are reluctant to give up control, and even those in their 60’s have not planned an exit.

“RIAs often wait for succession planning to be event-driven,” Lisa Salvi, vice president of Schwab Advisor Services, said when the study was released. “Instead they should be thinking about where they want to be three years and five years from now. Doing nothing is a strategy, but it does not give you as many options. Planning brings a much wider range of options.”

The option selected by Gary and his two sons, Benjamin and Andrew, both of whom are 30, is to share equity so the sons can own the firm when Gary retires.

“I built this firm since 1997 and 10 years ago I started getting concerned about what would happen to my employees and clients if something happened to me,” Gary said. Madison Planning Group, which also has offices in Syracuse and Long Island, N.Y., and in Lake Worth, Fla., has $320 million in assets under management, about 900 clients and nine employees.

“Clients began asking what would happen to them if I left” at about the time the sons were deciding on careers, Gary said. Benjamin, who considered being a police officer, decided to make Madison Planning a family business by using his marketing and organizational skills to help build the business. He is chief operating officer and Andrew is senior vice president.

There was no push back from other employees to the two sons stepping in as owners, they said. One employee has a small voting share and all employees have a profit-sharing plan.

Benjamin said he considered other careers, but “I had already invested a lot of myself into the business [by the time I got out of college] and I’d always viewed the people here as my family—and not just because of my dad, but because of the whole team. What could be better than working with people you’ve known and cared about most of your life?”

Andrew explained his side. “By the time I graduated from college, I knew financial services and helping people was where I wanted to be. Not only did I love the pure financial aspects of it, but I’d seen firsthand the impact the work had on clients’ lives. But I wanted to learn more about the business first.”

He joined Royal Alliance, Madison Planning’s broker-dealer, working in advisory services, where he supported the firm’s independent advisors. He said the role taught him how to be a problem solver for the advisors and their clients.

Andrew supports Madison Planning’s clients by providing policy analysis and financial planning. “I’m proud to say that we’re a family helping families. I don’t know many people who get as much personal satisfaction out of providing support and solutions to their clients,” he said.

He joined Royal Alliance, Madison Planning’s broker-dealer, working in advisory services, where he supported the firm’s independent advisors. He said the role taught him how to be a problem solver for the advisors and their clients.

Andrew supports Madison Planning’s clients by providing policy analysis and financial planning. “I’m proud to say that we’re a family helping families. I don’t know many people who get as much personal satisfaction out of providing support and solutions to their clients,” he said.

Source: https://www.fa-mag.com/news/one-way-to-solve-the-succession-planning-problem-50928.html

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