Succession planning: Are you prepared to transition clients?

Source: The Managing Partner Advisor, July, 2018

The following includes excerpts, reproduced with permission, from an article by Gary Adamson.

A CPA firm succession survey reported that 78 percent of firms do not have client transition expectations with financial penalties for retiring partners. If you are in that 78% percent, the balance of this article will give you some ideas on how to do a better job with client transition.

• Make sure that you have a mandatory retirement date for partners. The point here is that there is a target date (for instance age 65) that we all know is coming that is controlled by the firm. There is no way to create an effective transition plan without everyone knowing when it is. I recommend that the client transition process begins at least two years before the partner's expected retirement date.
• The transition plan specific to the partner should be developed with the managing partner. Clients should be grouped into categories based on the expected ease of transition and specific steps determined for each group.
• Make sure that a part of your plan is to free up the right people to be able to take the key relationships of the retiring partner.
• The trend by more and more firms is to build the client transition expectations into their partner agreements, [for example,] a two-year notice and the completion of a written transition plan with the managing partner. If the partner does not meet the firm's transition expectations . . . then the partner suffers a reduction in retirement payments.

A well-executed client transition plan is the best protection for the firm and the best insurance [retiring partners have] that they will receive those unfunded retirement payments down the road.     

For the complete article, read “The Important Issue of Transitioning Clients Upon Retirement