The mechanics of succession planning with Envestnet’s Jay Hummel

Jay Hummel: I think many founders are just scared to think about what their life would be without their business.

Jay Hummel: I think many founders are just scared to think about what their life would be like without their business.

Episode Overview

Have you planned as effectively for the transfer of your business as you have for the financial lives of your clients? In part II in our series on succession planning, (see part I here with Tim Kochis), my guest Jay Hummel continues the conversation and we discuss the operational and financial details of making a smooth transition.

Jay, along with Tim Kochis and Eric Hehman, is the co-author of a new book on succession planning titled, Success and Succession: Unlocking Value, Power, and Potential in the Professional Services and Advisory Space.

As a senior VP in the corporate strategy group at Envestnet, (see podcast with Envestnet founder Jud Bergman), Jay works closely with the firms largest RIA’s. Prior to Envestnet, he was president of a large RIA.

Here is the post I wrote covering 7 key insights gleaned from the podcast series on succession planning with Tim and Jay. It was originally published at 

Listen to the Full Episode

Steve Sanduski: Putting a succession plan in place is the fiduciary thing to do.

Steve Sanduski: One key is to maintain the value of the firm while the founder pulls back and lets other people shine.

Seven Quotes From Jay Hummel…

  1. Get outside help. I very much encourage anyone who’s getting serious about this to hire outside resources to help. The founder may need a life coach to help him think about this. A successor may need an executive coach to try to give them the skill set to be able to take over for the founder. I think an outside perspective can actually de-emotionalize a very emotional process.
  2. Start the process far in advance. I think some people listening to this are going to think this is crazy, because it sounds like that’s forever away, but when we looked at the very successful transitions, almost all had a very common theme, which was they started the process between five and seven years ahead of time.
  3. Your successor may be a team. If I was running a firm as a founder today, I would understand that my succession has to be a team, it’s not just going to be one person. I likely need my successor to be able to run the firm, but I also need to be able to position the firm so the successor can build the right team around him or her. Because the person running the firm as a successor will likely have very different skills set than the founder.
  4. Prepare your firm to be less “founder centric.” Look at every touchpoint that the firm has with the client. That can be anything from scheduling meetings, to who’s doing the market outlook, to who’s sitting in the meetings, and try to figure out how founder centric the organization is. The more founder centric the organization is, the more focus there needs to be on building processes around what the founder delivers for a client.
  5. Successors often have to make tough staffing decisions. A difficult part of a successor’s job is having to tell a founder that some of the people that they likely hired, treated like family, and who have been with them for a long time, are likely not the people to carry the business where it needs to go in the future and change may need to happen.
  6. Be empathetic for the other person’s view of risk. Founders often think they took the biggest risk by starting the business and now successors just have to come in a buy a cash flow. Successors feel they’re taking a big risk because they may have to mortgage their house to buy the cash flow while the firm may still be founder centric. I think this is the most important thing that we learned.
  7. Growth drives the valuation of your firm. The biggest thing, no matter what the buyer is looking for, which I think is overlooked is growth. Businesses that are growing, regardless of any other metric relative to the valuation, are worth a lot more than business that aren’t.

Jay Hummel on the connection between growth and firm culture…

It’s amazing, firms that grow tend to have good cultures. It’s kind of like winning as a sports team. Winning solves a lot of problems. Growth at a company seems to solve a lot of the problems.

Other Succession Planning Resources

iTunes Between Now and Success

Soundcloud Between Now and Success

Stitcher-buttonFree Resources!

  1. Grow Your Business Now!: A special report on 52 strategies, tips and tools to Grow Your Business Now! This is a tremendous resource guide.
  2. 5 New Ways to Grow Faster Podcast: This is a 40-minute recording of me being interviewed about 5 new ways to grow your business faster.
  3. How to Launch Your Own Content Marketing Program: This valuable ebook shows you exactly how to design and launch a content marketing program that gets your message out to your target audience and generates high-quality leads.

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Got a question? Email it to me and I’ll give you my take on it. 

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Steve Sanduski, CFP® is the CEO and co-founder of ROL Advisor, founder of Belay Advisor, host of the Between Now and Success Podcast, a New York Times bestselling author, and an international speaker.

Latest posts by Steve Sanduski, CFP® (see all)

By | 2018-02-21T15:52:18+00:00 November 8th, 2015|

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