Succession Planning Beyond the C-Suite

Retirement plan advisers are constantly thinking about their clients’ futures—but it’s becoming equally important for them to strategize for their own firms, too. Earlier this year, consultancy McKinsey & Co. estimated that by 2034, there will be a shortage of 100,000 advisers.

While there is often focus on how torches will be passed at the highest levels of leadership, the shortage on the horizon means the industry is not just looking for advisers to replace executive leaders. As teams grow and roles change, there is a need for succession planning at all levels of an organization.

“The knowledge transfer process is ever so important in our industry,” says Brad Sieniawski, a senior consultant at PlanPilot. While there are “absolute experts and gargantuans in thought leadership and perspective” in the industry, if their knowledge is not passed on, firms cannot help participants reach their retirement goals, he adds.

Look for Proactivity

Christopher DeAndrea, director of retirement plan consulting at Webber Advisors, says that leadership is not confined to the executive level, but is a mindset and a responsibility that should be cultivated across every department. Finding future leaders means looking for proactivity.

“As our organization grows, so does the need for thoughtful succession planning that identifies and nurtures future leaders in advisory roles, participant education, administration and compliance,” DeAndrea says. “Future leaders are those who step up without being asked, who anticipate needs and who consistently go beyond expectations. These individuals demonstrate a sense of ownership and pride in their work that mirrors the commitment of a founder.”

He says that as his firm plans ahead, it will focus on early identification of those who show leadership potential, then providing them with tools and support to grow and clear pathways for advancement.

Developing talent within an organization also ensures the new leaders will represent firms in the way they want.

“We need to develop talent from within, rather than just hiring fully trained advisers, because that’s expensive, and a lot of the time, we would prefer to have people trained in how we like to work with clients, rather than have to retrain people on how to do things differently,” says Phil Senderowitz, a managing director at Strategic Retirement Partners.

Develop a Training Ground

Once talent is identified, it is important to give those team members a place to develop their skills. Senderowitz says his firm has found the small plan market to be a good training ground where junior relationship managers and plan consultants can work, with oversight from more senior team members. In larger plans, there are often legions of people who have clear roles, but with startup plans, the employer is sometimes unsure of exactly what they want, both from the plan and for participants.

“We have to keep an eye on all the moving parts and shepherd it through from not existing to being a well-oiled machine,” Senderowitz says. “Stuff breaks all over the place, and then you have to learn how to fix it and identity issues as they come up.”

With smaller firms, the issues also tend to be less financially risky.

In practice, this may entail junior team members first watching a senior relationship manager onboard five plans, then participating side-by-side on five plans, then taking the lead on five plans with the senior person reviewing, Senderowitz says.

Ditch the Top-Down Structure

PlanPilot implements a horizontal leadership structure, and that entrepreneurial, team-oriented style drives the best type of succession, Sieniawski says. All members of the retirement services team across the process—from the consultant level to the investment research level to the client research level—have a say in how issues are addressed, both on accounts and at the firm.

“When your boss or your leader or manager is actually doing the same functions as you, it creates that sentiment that not only grows those junior or more associate-based employees, but it also helps for the future, because it’s a seamless process as things change,” he adds. “Things change all the time in the dynamics of the firm.”

Sieniawski says a top-down structure can lead to disconnect and unmet expectations, but when all members are empowered to interact with clients and suggest changes, there is a clearer transfer of information. He adds that members from all levels should be able to provide feedback on firm processes, such as via monthly or quarterly team-wide meetings.

Define Career Paths

In recent years, Shepard Financial has focused on developing a well-defined career path for its team, says Leah Sylvester, an executive partner in the firm and its president of retirement plans. In the past, she says, there was not always a clear trajectory for employees to deepen their knowledge, nor an understanding of the titles and responsibilities that could come with that additional knowledge, such as evolution into a management or operational role. But as a direct result of employee feedback, team members now have a better sense of the direction their careers can go, she says.

Sylvester says that a key to creating successful career paths is listening to individuals and their needs. While her firm has generic guidelines for professional growth, team members are able to cross over to different paths if their interests change.

“They might start off down one path being an internal support person, not thinking that they want to be externally facing clients or customers,” she says. “But maybe that story changes in five years. … We really feel strongly about placing the skill set with the right role.”

This kind of approach not only helps team members advance toward potential succession, but it also helps individuals feel part of the team’s growth. When they feel excited about the work they are doing, they do a better job serving clients.

That, in turn, benefits clients, advisers and personnel at all levels of a firm’s structure, both in the present and in preparation for a potential adviser shortage.