The 7 Ways to Transition Your Practice

Accountants without a succession plan are hurting not only themselves but their clients as well. Here are seven ways to see your practice continues after you retire—some of them are better than others.

What Are Your Options?
Established financial professionals have at least seven potential choices. Let's begin with the two worst choices:

1. Do nothing. You continue to put in long hours and look after your clients. You take few vacations. Your clients can get in touch in case of emergencies. You have clerical support to cover the phones or answer simple questions when you are on vacation or out of the office with clients.

Risk: Great. You drop dead, get hit by a bus or contract a debilitating illness. You stop working suddenly. Your clients are all left in the lurch. They get their records from your assistant and must find another accountant immediately. You aren't there to answer questions.

2. Pretend you are working. You work around filing dates. You use technology extensively. You delegate answering calls to your overworked clerical support person. This frees up time for 10 weeks of vacation a year and three-day workweeks. You are semi-retired, although you don't admit it.

Risk: Great. Your clients cannot reach you on short notice. They get upset. Your underpaid clerical support person gets overwhelmed and quits. Something falls through the cracks or doesn't get the attention it deserves. You have failed that client.

Now lets move onto the more practical choices:

3. Build out your firm.  It's likely you have taken this route. As the business grew you hired recent graduates. You also realized the need for growth and brought on a team member who focused on new business development.

Risk: Medium. It's likely your clients have met your team members. They understand if you aren't around one of the other accountants can access your records and address issues. However, if any clients see themselves as your client, they may choose to leave if you retire. This may be alleviated if you never actually "retire" but remain in the background, put in cameo appearances when they visit the office and return their calls. You own the firm. However your employees must be paid really, really well. They are doing all the work.

4. Merge with another firm. You've found another professional who shares your high ethical standards and approach to doing business. They are younger and have built a practice. You have a similarly sized clientele. You bring the two businesses together, a few years in advance of your retirement. You announce the merger to both sets of clients. Over time you meet each other's clients and work on bonding.

Risk: Low. You have established continuity. There's enough lead-time for clients to get comfortable. They don't feel a change is being forced on them, like a bank merger. You own a portion of the combined practice. Your revenue sharing decreases as you step away from the business and enter retirement.

5. Bring in the kids. Your children admire your profession. They followed in your footsteps. When they graduate from school and earn their certification, they enter into your business as junior partners. Your clients meet them during periodic visits.

Risk: Low. By introducing the next generation you have shown continuity. Most clients understand the intergenerational ownership of a business, especially if they now own the manufacturing firm their grandparents started.

6. Sell your practice. Larger firms buy smaller firms to gain market share. Some professionals new to an area prefer to buy into an ongoing practice instead of building one from the ground up.

Risk: Medium. Although it's the simplest-sounding solution and has a short lead time, it has several problems. There can be differing opinions of the value of the practice. The new owner likely pays over time because retention of clients is a major issue. Is the new owner's style compatible with yours? Your clients will notice.

7. Sell or transition to your staff. If you own the practice and pay your team salaries as employees, you might consider selling the practice to them instead of finding an outside buyer. Employee Stock Ownership Plans (ESOPs) are familiar to you.

Risk: Low. Your clients will likely remain, especially if you maintain a role in the background. If the practice has been bought out by the employees for cash they bring to the table, loans aren't involved. If bank financing is necessary to buy you out, the employee owners have debt service as an issue.

Everyone who owns a business needs a succession plan. Your clients probably have one for themselves. You have to create one for yourself.

About the author:
Bryce Sanders is president of Perceptive Business Solutions Inc. in New Hope, Pennsylvania. He provides HNW client acquisition training for the financial services industry. His book "Captivating the Wealthy Investor" can be found on


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