As a financial adviser, you build your career around helping individuals and businesses make financial decisions. This may include decisions around investments, protecting risk, or other courses of action. The aim is to help people navigate their life stages better, help them enjoy retirement or even plan new business ventures.
For these people, you are a hero. You help them create generational wealth not only for their immediate families but hopefully for the generations that come after them.
What will your legacy be?
At 1Life Insurance, we believe that building wealth is not just for your clients but for yourself and your future generations too. It should start with you – you must utilise your financial knowledge to also secure the future of your family. Let’s discuss some ways which can help you achieve this.
Know and love your money
This might sound obvious, but as a financial adviser, you are sometimes so caught up in helping others reach their goals that you can forget to apply the same principles to your own money. Decide to be intentional with it. Keep track of your spending, get rid of debt, budget and pay attention to where you are spending your money. Make sure your estate planning and life cover are up to date. In other words, practice what you preach.
More importantly, know your risks – and this is especially true when it comes to your brokerage. Identifying and managing risks that affect your business is critical. 1Life recently highlighted top business risks identified by local and global experts. The biggest take-out here is that to build a resilient business, one has to plan for possibilities.
Establish a business succession plan
There are two issues here. Building a business continuity plan as well as a succession plan. Because business continuity is not the same as succession planning.
A succession plan is premised on you leaving your brokerage permanently. This is very different from a business continuity plan, which lays out contingency arrangements for a temporary leave of absence or temporary closure of your business due to civil unrest, illness, load shedding, etc. Both are important and can mean the difference between preserving generational wealth as an entrepreneur and financial adviser, or not.
According to an article in Moneyweb, the chance of a family-owned business surviving the transition from the first to the second generation in South Africa is in the region of 30% and the chance of it surviving into a third-generation business is only around 10%.
From this perspective, the most important aspect is to determine upfront what the requirements are for other family members to join the business and how decisions are made.
It is important to note that by passing on your business to your family, you allow them to continually benefit from it. This doesn’t mean that you have to have a specific family member succeeding you. However, without an explicit distribution of your estate in your business bylaws or operating agreement, there may be issues if your family wants to stake a claim to your business. In this, consider how your business is set up (sole-proprietor, corporation, partnership, etc.) to see where it could potentially be open to liability.
Then, ensure that you leave clear instructions as to how you want the business to continue running; or if you want it sold if something were to happen to you.
If you decide to leave your business to a family member, then Harvard Business Review has an idea about how to make the transition process easier: “Transition is a process, not an event — and the more the continuity plan resembles a discussion rather than an ultimatum, the greater the chances of success. The plan can’t simply be dictated from one generation to the next; incoming leaders need to be prepared and aligned.”
Protect your Intellectual Property (IP)
IP is vital when it comes to running your brokerage. Consider trademarking if you feel you need to protect your brand or a specific way of doing things.
Look for longevity in a partnership
Finally, from a business continuation perspective, ensure that you enter into partnerships with insurers or investment product providers who have your back. Ensure that your contractual agreements with these providers are sound. Ensure that their claims, underwriting, and other processes are client-focused to make certain that your clients will be looked after, even if you were to leave your business.
Securing your business assets sooner rather than later is one of the best executive choices you can make. Take control today. Be intentional with your time and money; your wealth-building journey depends on it.