How to Keep Succession Planning Costs Low

When the SEC released their proposal to enforce succession and business continuity planning, they also looked at what it might cost a financial advisor to put these plans in place. They looked at the one-time costs as well as the ongoing costs to create, implement, and execute this type of planning, and what they found might surprise some financial advisors. Are these numbers more than you expected, or do they line up with your estimates?

How Much Is Succession Planning Going to Cost?

The SEC admits that “the initial and ongoing costs imposed by the rule would vary significantly among firms depending on the complexity of the advisor’s operations,” but that “the flexibility of the proposed rule should allow advisers to tailor their business continuity and transition plans to the specific risks their businesses face at minimum possible cost.” The commission goes on to estimate that the one-time costs to implement a succession and continuity plan could range from $30,000 on the low end to $1.5 million on the high end. On-going annual costs are estimated to be between $7,500 and $375,000 each year.

How to Keep Your Succession Planning Costs Low

If you are concerned about the impact of the costs of succession and transition planning on your business, there are a variety of ways you can keep your costs lower.

Start as soon as possible.

The sooner you can begin your succession planning, the more you can spread out some of the initial costs. A lot of those costs come from things like developing the procedures that need to be put in place to ensure a successful and smooth transition, data recovery and backup, and making communication plans. If you can spread out those costs, you should be able to easily absorb them into your business.

Invest in good infrastructure.

This means good security systems, good data backup, and quality third-party suppliers. Cutting costs in these areas could end up costing you more in the long run and they’ll become vital when it comes to transitioning your business either due to your retirement or because of an emergency. Invest in quality systems and make your life easier.

Find a quality succession partner.

Working with a partner organization on your succession planning can help keep your costs low because they know exactly what needs to happen and when to make a successful plan. You won’t end up needlessly spending money on things that don’t matter or wasting any of your time. The right succession partner can guide you through the process, make sure everything is in place, and even help you execute the plan when the time is right. You’ll appreciate their guidance as much as you’ll appreciate how they ease the impact on your budget.
Need to find a partner in succession planning? We can help. Talk to the advisorRETIRE™ team and learn how we can help you create a succession plan that’s right for your business. Give us a call or contact us through our website today.