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Bob Veres E-Column: The Checklist for Succession

At the request of a subscriber, I asked readers of Inside Information to help me compile a checklist of the basic information that would need to be passed on to a successor of your business.  Below is a checklist compiled from more than 100 messages that I received, many of them offering a piece of the overall puzzle.

But before we get to that, you have to ask yourself: is it worth my time and trouble to fill out this long checklist for my successors?

To answer that question, let me turn to Cindy Gleason, of Gleason Financial Group in Cedar Falls, Iowa.  Gleason recently inherited a firm through a succession plan with a person she describes as a good friend and business colleague, who passed away in early November.  There was a signed succession plan, and Gleason was named successor.  “We live about 5 hours apart, and we both trusted each other,” says Gleason.

The succession plan, drafted by the other planner’s broker-dealer, consisted of three pages of writing that, to put it kindly, didn’t cover all the necessary bases.  “It was a month before I was able to see her managed accounts, which were managed solely by her,” says Gleason.  “The broker-dealer wouldn’t return my phone calls or emails, and I discovered later that they didn’t have a clue how to handle this.  When I did finally get a compliance person on the phone she said:  “We have never had a rep die with a succession plan, so we really don’t know what we’re doing.” 

Some clients knew that Gleason was the successor, but most did not, so transferring loyalties was extremely difficult.  “I was just barely able to save the internet/telephone service from being shut down completely,” Gleason adds.  “It’s one thing to sign the succession plan.  It’s completely another to think through how, within mere hours, to be able to care for and contact another advisor’s clients.  It has been very frustrating for both the clients and me.”

As a result of this experience, Gleason has vowed never to put her own successors through a similar nightmare.  And so she has given some thought to what information she, herself, will pass on.

“The very first item, and the most important one in any advisor’s office, is a standard operating procedures manual that gets updated every single time a word changes in how you answer the phone all the way to changes in money managers and strategies,” she says.  “Ideally, the CRM systems should be either easily transferable or, better yet, the same—so nothing gets lost.  There should be an account for initial transferring of phone lines/internet/untangling what each item and software needs to be deleted from the credit cards.  There should be provisions to shut the company credit cards down.” 

“All I know,” she adds grimly, “is I’m not doing this to my family or anyone else ever.”

Meanwhile, Michael Kitces has offered another important caveat.  Michael’s firm, Pinnacle Advisory Group, provides the PRISM continuity program, acting as a successor to advisory firms that don’t have a succession plan.  If your firm is a sole proprietorship, then you should pay attention to what he has to say:

For “small” solo advisors who simply operate as a sole proprietorship, when the advisor dies, so does the entire business. Literally. The death of the sole proprietor advisor means all client advisory agreements dissolve. The advisor’s Investment Adviser registration with the state dissolves—which means even if there’s surviving staff, they legally CAN’T serve the clients once the advisor dies, and all revenue must cease immediately.

Furthermore, if the “business” (which isn’t, anymore) does a fee sweep after the advisor’s death, the regulators will require the estate to refund any fees that were allocable to the time period after the death of the advisor – even if the staff members were still providing service – because the business, advisory agreements, and advisor registration, all died with the advisor.


We often talk about the role of business entities in a ‘live’ succession plan (as some entity types are more transferrable than others for business planning), and also because different entities have different tax treatment. But in the continuity planning context, it takes on a whole other dimension, because having an actual legal entity that lives beyond the advisor is crucial to legally even be ABLE to continue the business and execute the rest of the continuity plan.

Below is the updated checklist, intended for advisors to complete in anticipation of possible premature death, or to transferring the business internally or externally.  Obviously, some of these will be covered with an internal transfer, but each item is included, in the interests of completeness.

Succession Planning Checklist

Management succession

List type of business entity, and if applicable, articles of incorporation.  (Note: if the business to be transferred is a sole proprietorship, it should probably be changed to a C, S or LLC entity; otherwise the business dies with the proprietor, all client advisory agreements dissolve, the investment adviser registration with the state dissolves and the staff cannot legally serve clients.)

Introduce the successor to your staff, and make them aware of the succession arrangements. 

Identify staff person who is licensed in the state as a temporary backup.

Create an organization chart, with email and other contact information for each staff member, plus job descriptions, salaries and benefits and tenure with the company.  Any important additional information can be added here, including employment contracts if any.

Create a detailed procedures manual which outlines the different office roles, how different key tasks are performed and by whom.

Outline in written form your vision for the firm and for how clients will be served.  (This also helps the successor understand client expectations.)

Put detailed client information (contact information, birthdays, children and pets, all meeting notes etc.) in an up-to-date CRM system—including each client’s fee structure, since many firms have exceptions, and the overall fee structure (AUM, breakpoints, range of fees for up-front planning etc.)

The CRM should also list and routinely update work in progress.

Custodian contact information.  (Find out in advance what would happen with undistributed income, and procedures for transferring client accounts.)

Where are keys to the office?

Are there other keys to filing cabinets, desks etc.?

Burglar alarm codes

Landlord name, contact and phone — and a copy of the lease.

Payroll service name, contact and phone, and an access letter that permits the successor to continue to process payroll.

Copy of the firm’s E&O Policy and contact information.

Create an inventory of all software used in the business.

All software and online passwords can be maintained in a password manager like Roboform, LastPass, Keeper or Secret Server.  Where is the password manager password stored?  On what device is the password manager file stored? 

Password for the mobile phone the advisor used to conduct business.

Inventory what staff members have access to which software tools and client information.

Specify renewal dates for software and subscriptions—including anything on monthly auto-renewal that would need to be transferred over to the new firm.

Make a list of bank accounts and bank account information (so auto bill payments are not interrupted)  Make sure the spouse is on the signature page of the checkbooks.

Password to access each bank account’s online statements (if not included in password manager).

List of debts owed and lines of credit.

Company credit card information (so the cards can be shut down or transferred).

An unaudited balance sheet, unaudited profit and loss statement, and an unaudited personal net worth statement.

A copy of the company’s annual federal and state tax returns.

Copies of any audit letters received from the SEC or state during the last five calendar years.

Also: Name of executor, accountant and estate attorney.

Client succession

In advance:  Make clients aware of the successor and introduce the successor to them, either in writing or in person.

In advance:  Create a letter that the successor can send out to clients in the event of disability or death, recommending that they work with the successor.

In the CRM, in addition to the client contact information, consider adding some brief notes about each client, including any special arrangements—the type of information that could be critically important to maintaining clients.

Financial succession

Negotiate a continuity agreement with the other advisor, outlining the intention, price (based on valuation), timing and process for transfer.

Updated living trust or will which acknowledges the continuity agreement.

Get a valuation of the firm.  Does the successor have sufficient capital to buy the firm?  (This could involve a life insurance policy.)

Have sufficient cash on hand to cover office overhead expenses during the transition.  (This could involve a life insurance policy.)

Type of Insurance Policy


Agency Name

Policy Number

Coverage Amount

Agent/Assistant Names
Phone Number(s)

Email Address(es)

Notes about policy (Insured / Policy Holder)