Success and Succession. Tim Kochis

– the buyer's right price. That price may not equal the amount of effort and work put into building a firm.

       Reasoning Style: Whether someone has a concrete or open reasoning style is usually a personality trait. This is not to say a person with a concrete, black-and-white reasoning style can't gain insights; it's just more likely that new insights are going to come from a style that is open to tangents rather than a fixed destination.

      As successors, Jay and Eric struggle with this one the most. As Eric explains, “Often, the successor is more a businessperson, bringing structure to the business to complement a charismatic, intuitive founder. The successor often needs to be concrete in decisions and to bring consistency and predictability to the company. This points to the opportunity to advance the process around their different strengths.” Often, founders have the advantage here. You may just need to spur them to their own creative aptitudes and their taste for vision. What would make a truly inspiring future?

“The Painters”

      Successful transitions are an evolution not a revolution. Philip Palaveev spends most of his time helping advisory firms create better organizations. Philip describes a story from a forum he moderated; it serves as an inspiration for enhanced awareness in transition efforts. At a session focused on success with both founders and successors present, one founder stood up and eloquently described how creating a business seemed to him a lot like painting a picture. He wanted the picture to be beautiful and to be preserved so that many could see and appreciate it. A successor quickly jumped up and explained the problem with this view. The successor said “You are missing the point. We are artists, too; we want to keep on painting the picture.”

      Many firms became a masterpiece because founders were visionary enough at the outset to see there was a better way of doing things for their clients and lots of room for improvement in their business models. They were the founders starting fee-based firms in the financial advisory space. They were founders paving the way for a new business model around financial planning, designing financial plans on dot matrix printers, or even on yellow legal pads, and using handheld calculators. They were accountants realizing there was a model built not only on compliance and tax returns but on becoming business advisors and developing deeper relationships with their clients. These founders rose to the occasion in the face of great challenges and created new opportunity for their clients – and, in so doing, for themselves.

      Successors can achieve the same kinds of accomplishments if they are given the chance. In all industries that advisory businesses serve, there are great challenges ahead. The world is becoming more complex for the clients they serve. Advisory services firms cannot expect to be immune. Technology is advancing, regulatory costs are rising, and expectations for the services provided are rising while prices are falling. There is no lack of ongoing challenge, and there's no lack of opportunity for ongoing entrepreneurial success by the successors to the initial pioneers. As Bernie Clark, executive vice president at Charles Schwab, puts it: “Regulation is going to impose [a] much greater burden on advisory firms, probably fostering more combinations, but forcing much more sophisticated firms in any event.”

      So founders cannot expect successors to treat their firms like masterpieces in a museum. Successful firms don't hang on walls and remain unchanged. Herein lies the lesson. The remainder of this book is about conflict. It's about a celebration of the masterpiece founders have created, but it's also about the difficult necessity of change. This book is about making founders and successors realize they have something in common: Both of them are painters. They want the best for their firms and clients. The transition process requires founders and successors to grab a new canvas. Let's paint.