Few people want to think about their own mortality; we’d all rather assume that we have all the time in the world. But in reality, none of us knows what tomorrow will bring, which is why planning for what you leave behind when the inevitable happens is so important.
The Wall Street Journal’s blog today published an article about the difficulty caused when a business owner died suddenly without a succession plan in place. We’ve written about the importance of succession planning here, here, and here, but a real-life example like this helps underscore the idea.
The story, which you can read here, describes a financial advisor in his late 50s who was the sole owner and advisor in his company. When he died suddenly, his clients were left with no one to handle their accounts and ended up scrambling to find a new money manager. The irony here is that financial planners always stress to their clients the importance of succession planning, especially in sole proprietorships.
The article goes on to discuss another financial services firm with a middle-aged, sole owner that lost two huge clients who were concerned about what would happen to their accounts if their advisor died suddenly. This proves that succession planning is important for the health of a business even before the plan would be put into action by a death. Perhaps if that business owner had a plan in place, he could have reassured those clients and kept them on his roster.
If you’re putting a succession plan in place, remember that a thorough business valuation is an important first step.
