Profiles in Excellence
Chief Investment Officer, PDS Planning
Senior Financial Writer, Capital Group
Preparing clients for the future? That’s something PDS Planning has done for three decades. The RIA firm, though, is also thinking more about its own days ahead, showing it can keep serving clients for generations to come.
About three years ago, the company accelerated its succession plan — the process of handing control and management from the founding partners to a new set of owners. Lessons it learned can be applied by other RIAs thinking about their own futures.
If succession isn’t already top of mind with advisors, it will be. The average advisor is 50 years old, and advisors age 55 and older manage 37% of assets, says Cerulli Associates’ U.S. Advisor Metrics 2017 report. Moreover, 28% of advisors within a decade of their planned retirement don’t have a succession plan in place, Cerulli found. Without a central practice for succession, as with many wirehouses, it’s incumbent on independent RIA firms to come up with their own plans.
The average advisor is 50 years old.
Advisors aged 55 and older manage more than a third of assets. Assets under management by advisor age.
Sources: Cerulli Associates, Meridian IQ, Investment Company Institute, Insured Retirement Institute, VARDS, Strategic Insight/SIMFUND, Investment News, Judy Diamond, Department of Labor, PLANSPONSOR, S&P Capital IQ MMD, Financial Planning, Financial Advisor Magazine, Investment Advisor Magazine, and Cerulli Associates, in partnership with the Investment Management Consultants Association, WealthManagement.com, and the Financial Planning Association® (FPA®)
PDS Planning — an RIA firm based in Columbus, Ohio, with more than $565 million in assets under management — got ahead of this. Kurt Brown, chief investment officer and one of the firm's three new owners, approached the leadership transition deliberately and carefully.
As with many RIAs firms with founders at the helm, PDS Planning needed a succession plan. The founders, who built the firm out of an accounting practice, started planning for the future years ago.
Enter Brown, 31. Having joined the firm 10 years ago as an intern, he was eager for more responsibility and saw a smooth transition as a way to extend the firm’s success and ensure clients’ needs are met into the next generation. More than half the firm’s assets under management are held by high net worth clients, so preserving relationships beyond the founders’ careers was key.
Clients “want to know that they’re not only going to have a trusted advisor there for them, but a trusted advisor there for their children,” says Brown.
Such transitions can be difficult, as clients have decades-long and personal relationships with the founders, who are taking a backseat role. But Brown says that correctly handled transitions get firms thinking about their future and offer big benefits to clients.
How did PDS pull off a successful transition? Brown offers several tips:
Preparing for the future also means that RIAs must shift to meet their clients’ needs. For example, Brown sees a shift away from face-to-face meetings over the next two decades. “They still want a trusted advisor. They still want a person they can always contact, but it might not necessarily be an in-person meeting in the office,” he says. So PDS plans to explore new systems that will allow it to serve its clients remotely.
Profiles in Excellence
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