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Fidelity Helps Shift the Mindset Around Succession Planning with Comprehensive New Program for Investment Advisors
Program Designed to Drive Planning for Investment Advisors Who Are Not Fully Prepared for SuccessionBOSTON-- Fidelity Institutional Wealth Services®, a leading custodian for registered investment advisors (RIAs), today unveiled a comprehensive new program designed to help investment advisors envision and formalize their succession plans.
According to the 2011 Fidelity RIA Benchmarking Study, three-quarters (75 percent) of participating investment advisors either don’t have succession plans for their businesses or have plans that are not ready to be implemented.1
Fidelity’s “Realizing the Value in Your Firm” program includes a series of hands-on workshops being held across the country that help advisors understand their succession planning options, engage with advisors who have executed succession planning strategies and ultimately choose the succession “track” that is right for them.
Fidelity uses a sequence of personal and group exercises including an innovative Track Selector GameTM to help advisors determine which of three succession strategies is most aligned with their vision: “internal transition,” “merge and stay involved” or “sell and move on.” (Click here to see more from the workshop and view the Track Selector Game in action.) The workshops are complemented by personalized consulting from Fidelity and certain third-party succession consultants, as well as a toolkit that includes worksheets, planning templates and a robust list of resources to help advisors create and implement their plans.
“We built this program around the insight that succession planning conversations need to start at a higher level. Many advisors rush to determine their firm’s value or find a partner, but succession planning is more about shifting one’s mindset than making a transaction,” said David E. Canter, executive vice president and head of Practice Management and Consulting at Fidelity Institutional Wealth Services. “This program helps advisors answer the question ‘what do I really want for the next phase of my practice and my life?’ We believe addressing this very significant element of succession planning will inspire advisors to take action and create more formalized plans.”
Recent Fidelity research finds that clients are concerned about their advisors’ succession plans. More than half of investors (54 percent) who work with an advisor say it is important that their advisor have a succession plan.2
Two-thirds (66 percent) of RIAs would prefer to have an internal successor.3 Among RIAs who feel an internal successor is the best route, less than a third (29 percent) have selected a successor.4
“When succession planning is equated with retirement, it is not always a priority because many investment advisors are passionate about their practices and don’t see themselves transitioning out of the business. In fact, nearly half of RIAs report that they don’t plan to leave the profession or retire5,” said Canter. “However, when advisors think about succession planning as a critical part of business continuity -- protecting the asset they have built and the clients that they serve -- it can and should move to the top of the list.”
Fidelity’s program presents three tracks for advisors to consider:
• Track 1: Internal Transition
Advisors who select this track are typically interested in handing over the reins to a junior advisor, family member or internal staff member. These advisors are confident they have the ability to select, hire and mentor someone who will share their same investment philosophy or planning approach. Retaining the firm’s brand culture and client base after the transition are important objectives.
• Track 2: Merge & Stay Involved
Advisors who select this track are typically interested in finding like-minded advisors to complement each others’ strengths, leverage similar business cultures and benefit from integrated staff, tools and technologies. These advisors have a desire to continue to work after the transition, are willing to meld their investment process, and in some cases may consider revising their investment philosophy. Taking the time to find the right partner firm and dealing with the complexities involved in merging two firms are important considerations.
• Track 3: Sell & Move On
Advisors who select this track are typically interested in making a complete exit from the firm and are comfortable turning the reins entirely over to someone else. There is little or no concern about retaining the firm’s name or brand, and these advisors understand that their clients may be redirected into new investment strategies and products. Realizing close to the strategic fair market value of the firm is important.
After advisors select their tracks, Fidelity provides consulting and access to tools and resources to help advisors formalize and ultimately execute their plans. This includes leveraging a detailed workbook with resources such as a talent readiness assessment, cultural compatibility checklist, partner discussion guide and keys to a written succession plan.
About Fidelity Practice Management and Consulting Program
The Fidelity Practice Management and Consulting Program is a multi-faceted client service that provides advisors access to a wide array of insights, best practices, strategic consulting services and business-oriented tools and programs to help accelerate business growth, maximize productivity and protect their practices.6
About Fidelity Institutional Wealth Services
Fidelity Institutional Wealth Services is a leading provider of trading, custody and brokerage services to Registered Investment Advisors, Trust Institutions and Third Party Administrators. The company is able to leverage the capital, resources and expertise of Fidelity Investments, one of the world’s largest financial services companies, on behalf of its clients. This includes access to a comprehensive set of products and services, innovative investment tools and research, an integrated brokerage and trust platform, and dedicated client service professionals – all designed to help its clients thrive by growing their businesses, more effectively meeting customer needs, and enhancing operational efficiency and profitability. Fidelity Institutional Wealth Services custodies more than $550 billion in assets on behalf of nearly 3,300 clients, as of March 31, 2012. For more information about Fidelity’s services, please visit http://fiws.fidelity.com.
About Fidelity Investments
Fidelity Investments is one of the world’s largest providers of financial services, with assets under administration of $3.7 trillion, including managed assets of $1.6 trillion, as of April 30, 2012. Founded in 1946, the firm is a leading provider of investment management, retirement planning, portfolio guidance, brokerage, benefits outsourcing and many other financial products and services to more than 20 million individuals and institutions, as well as through 5,000 financial intermediary firms. For more information about Fidelity Investments, visit www.fidelity.com.
1 2011 Fidelity RIA Benchmarking Study, Sept. 2011, which was conducted in collaboration with Quantivus Consulting, Inc., an independent company not affiliated with Fidelity Investments.