SUMMARY
In the financial advisory world, two terms often surface in conversations about business planning: continuity and succession. While they sound similar, they serve very different purposes—and every advisory practice needs both. In this episode of The Rare Advisor, Aaron Grady dives deep into these concepts, clarifying misconceptions and outlining why these plans are critical for your firm’s stability, sustainability, and long-term value.
A continuity plan is your short-term emergency protection. It answers the question: If I’m suddenly unable to work, who takes care of my clients and my business starting tomorrow? This plan addresses unexpected events like death, disability, or illness. It ensures immediate stability by defining who will serve your clients, how they’ll access systems and workflows, how compensation flows, and how communication happens with clients, custodians, and your team. In short, continuity keeps the business alive during a crisis.
A succession plan, on the other hand, is a long-term strategy for transitioning your business on your timeline. It’s about preserving value, preparing for retirement, and creating a thoughtful client transition strategy. Succession planning involves structuring deal terms, valuations, financing, and cultural continuity. It’s not just a business decision—it’s a legacy decision. Where continuity focuses on protection, succession focuses on preservation and growth.
Aaron simplifies the distinction: continuity responds to the unexpected; succession prepares for the expected. Continuity creates a temporary bridge, while succession establishes a permanent destination. Continuity stabilizes operations; succession ensures sustainability. Think risk management versus value management. Continuity protects against loss; succession maximizes enterprise value.
Why do you need both? Aaron offers four compelling reasons:
- Regulators and clients expect it. Continuity planning is increasingly required by regulators, and clients assume you have safeguards in place. Succession planning signals professionalism and preparedness.
- They solve different problems. Continuity addresses risk; succession addresses value. Missing either exposes your firm to avoidable loss.
- Continuity protects against catastrophic value drop. Without it, an unexpected event could force a fire sale, scattering clients and eroding revenue.
- Your family and staff depend on both. Continuity protects income and stability; succession protects their future.
Aaron then shares practical steps for building or improving these plans. For continuity: identify your continuity partner, define terms, document triggering events, grant access and authority, confirm compensation, and review annually. For succession: get a professional valuation, define your timeline, choose your successor, create a talent development plan, outline client transition strategies, and structure the deal terms. Remember, succession is not an event—it’s a gradual transfer of trust, identity, and ownership.
Aaron closes with a powerful reminder: a continuity plan protects tomorrow; a succession plan protects the next decade. Your clients expect both, your team deserves both, and your family depends on both. These plans don’t just safeguard your business—they elevate your professionalism and secure your legacy.
TRANSCRIPT
Aaron Grady, Advisor Consulting Director at USA Financial - Welcome back to the Rare Advisor Podcast where we help top financial professionals build referable practices, deepen client relationships, and elevate their brand. I'm your host, Aaron Grady, and today we're going to tackle one of the most misunderstood topics in our industry, the difference between a continuity plan and a succession plan, and why every advisory team needs both. So let's jump right in. Before we get started, let's be clear about the purpose each plan serves. A continuity plan is your short-term emergency protection. It answers one simple question. If I'm suddenly unable to work, who takes care of my clients and my business starting tomorrow? Think about it through the lens of death, disability, illness, or maybe some other disruptive life event. A continuity plan typically includes steps of who serves your clients, how do they access your system and your workflows.
How does compensation flow? The temporary or permanent transfer of authority and how communication happens with your clients, your custodians and your team. This is about immediate stability. It's essentially your firm's emergency backstop. A succession plan, on the other hand, is a long-term strategy for how you'll eventually transition the business. Ownership, leadership, client relationships and on your own timeline.
This plan is about protecting intentionally and building around future goals, like preparing for the next generation of advisors or maybe monetizing the business you've spent years building. Another way to say that, and the way I like to say it, is realizing the value of your life's work. This is about structuring the deal terms, the valuation, the financing, creating a thoughtful client transition strategy and ensuring the cultural continuity of your firm identity. Now, where continuity planning is about protection, succession planning is more about preservation, growth, and personal legacy. So, just to be clear, let's see if we can highlight a bit better the key differences of both. And if I could simplify it down, I would say this. Think unexpected versus expected.
A continuity plan responds to the unexpected. A succession plan prepares for the expected. Your retirement, the evolution of the practice, strategically scaling back. Or maybe it's temporary versus permanent. A continuity plan creates a temporary bridge. Sometimes it can be permanent, but mostly it's temporary bridge. A succession plan creates a permanent destination. Stability versus sustainability. Continuity stabilizes operations in the of crisis. Succession plans typically ensure the long-term sustainability of the firm and the value that you've built. And then lastly, I would say, think about it through the lens of risk management versus value management. A continuity plan or continuity protects against the risk of loss. Succession protects and grows the enterprise value. Another way to think about it is, continuity keeps the business alive. Succession helps the business thrive. And to be clear, as we stated earlier, every practice could experience the need for a continuity plan. Only those practices that want to maximize their value will truly build a successful succession plan.
But as we said, ultimately, every financial advisory practice needs both. And there's really just four core reasons, if I was gonna boil it down, four core reasons why you can justify having both in place. Reason number one, regulators and clients are going to expect it. Continuity planning is being increasingly required by regulators. We're seeing it in the BD space, we're seeing it in the RIA space, and quite frankly, your clients assume that you have some form of protection in place in case of the unexpected happening in your business. You build the same things in their, inside of their plan, so why wouldn't you have that inside of your own practice? And succession planning signals professionalism and preparedness. It allows you to show that you have a runway and a plan for the eventual retirement or transfer of the business to leave your clients in good hands. Reason number two, as I stated earlier, continuity plans and succession plans solve pretty much different problems You can't necessarily substitute one for the other a continuity plan is designed for risk management purposes a succession plan is designed about value management if you're missing either inside of your practice you're exposing your firm to what quite frankly is an avoidable and avoidable loss Reason three continuity protects your firm from catastrophic value drop without continuity and unexpected event forces a fire sale. Clients could scatter, revenues could drop, deal terms can evaporate. With a continuity plan in place, you're going to protect the foundation that makes succession possible later on your timeline. And then reason number four, and this one's important, your family and your staff depend on both.
When something happens, people don't rise to the occasion. They fall to the level of the plan. A continuity plan protects their income and their stability. A succession plan protects their future. So what are some practical steps that you can take to either start this process to build a continuity or succession plan? Or what are some steps that you could put in place to help improve the plans that you already have? So starting with continuity first.
Here's what every advisor would need to put in place. Start by identifying your continuity partner. Is this going to be internal? Is this going to be external? Define the terms. Is this a transfer of ownership? So is this a buy-sell agreement? Or is this a bridge to a future sale? Or what we've seen quite a bit lately is more of a hybrid structure. Is this structured to have right of first refusal where the bridge partner gets the chance to buy the practice if they want to, or is there a sunset provision in there, or is there an opportunity for a junior advisor to try to buy the practice, but if they can't, then the ownership is, or the estate is able to sell the practice. But regardless of any of those situations, you always need a person or a partner in place to help maintain the business, why that's all being structured out.
Document the triggering events. What activates the plan? Is it death? Is it disability? Is it illness? Make sure you grant access and authority to your systems, your client lists, your workflows. So this means you're going to probably need some legal documents in place to make sure that you are passing over the baton and that person can get access to things need to continue the business. Confirm the compensation model. How does the continuity partner get paid? If it's a buy-sell agreement, it probably is pretty straightforward. If it is a bridge to a sale, then you probably want to structure how long does that compensation last? What is it based off of? Is it a salary? Is it based off of the continued growth of the firm? But make sure that you get this all structured out. And then lastly, for the continuity plans, make sure that you review these annually, especially as your practice continues to grow. This is the fastest plan to build, but often it's the most heartbreaking one if you actually need to employ it.
So let's talk about succession and let's focus on what are some of practical steps to starting your succession plan. Get a professional valuation. Do it yearly. I know it costs money, but spend the money. So do it yearly, or every 24 months if you wanna cut some costs. Define your ideal timeline. Is it five years? Is it 10 years? What's optimal for you and for your time horizon? If you're within five years, you're too close. You need to speed the process up. You want to have plenty of time where you don't feel rushed trying to find a succession partner or to get your deal structure in place. Choose your successor, internal or external, but make sure that you're thoughtful about who's going to shepherd your clients going forward. This is about your personal legacy, remember.
Create a talent development plan. Now, this is one, quite frankly, this item and this fact, idea, concept, is one that often advisors kind of slide over and miss. The idea of mentoring and shadowing, gradually shifting responsibility to your current advisory staff for the purposes of either internal transfer, succession to them, so that they're prepared to know how to run the practice, know how to manage a P &L or external, preparing them so that they're there to help retain your clients and they become a value add to the new succession partner. Either way, both are very important for the preparedness and the ongoing value of your practice. And then also make sure that you outline the client transition strategy. Design your client communication arc and make sure that the messaging really starts with early messaging being the key. And then lastly, the deal structure. Make sure that you define the terms, the financing, define roles and responsibility for your team after the transition. Talk about team retention. And what is the advisor's responsibility and role post-sale? Those are just some really bulleted ones, but there's a lot more to it. But make sure that all of the deal structure is ironed out. Remember.
Succession is not an event. It's a gradual transfer of the trust and identity and ownership of your practice. you, as you think about your practice today, remember a continuity plan protects tomorrow. A succession plan protects the next decade. You're going to need both. Your clients expect both. Your team deserves both. And quite frankly, your family depends on both. These aren't just business decisions, they're legacy decisions. So, if you're on the fence or if you don't yet have one or both of these plans in place, now is a perfect moment to start the conversation. These plans don't just safeguard your business, they elevate your professionalism and your peace of mind. So, thanks for listening to the Rare Advisor podcast. If you enjoyed this episode, Make sure to like and subscribe and stay tuned for more strategies to build a referable, enduring practice your clients deserve. And as always, when the why is clear, the how becomes easy. So never lose sight of your why.
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The RARE Advisor is a business model supercharged by Recurring And Repeatable Events. With decades of experience coaching successful advisors, your host, along with other leaders in the industry, discusses what it takes to grow a successful practice. With the aim of helping financial professionals and financial advisors take their business to the next level, this podcast shares insights and success stories that will make a real impact. Regardless of the stage of your practice, The RARE Advisor will provide thoughtful guidance, suggestions for developing systems and processes that work, and ideas for creating an authentic experience for your clients.
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