The Other Myths of Succession Planning

Amar Pandit , CFA , CFP

Amar Pandit

A respected entrepreneur with 25+ years of Experience, Amar Pandit is the Founder of several companies that are making a Happy difference in the lives of people. He is currently the Founder of Happyness Factory, a world-class online investment & goal-based financial planning platform through which he aims to help every Indian family save and invest wisely. He is very passionate about spreading financial literacy and is the author of 4 bestselling books (+ 2 more to release in 2020), 8 Sketch Books, Board Game and 700 + columns.

The reason the headline reads “The Other Myths” is because I had written a post called “The Most Common Myth of Succession Planning”, on June 8th ,2021.

You can refer to the post by clicking above but I am reproducing some lines from that post here. The Myth in question is as follows:


Most people think of succession planning as something related to age. They think this is something to be thought of at age 60 or if they decide to ever exit the business or sell. They think there is time to think about this later. There is no urgency. This is like someone saying, “I am not going to die today; hence I don’t need life insurance now. I will look at it later”.

Imagine a client were to tell you this. We would jump immediately and say “Sir, you need life insurance because life is so unpredictable.” For all the wisdom that we impart, we forget to follow our own wisdom. Most businesses or firms do not have life insurance. I am not talking of Key Man Insurance here; I am referring to Succession Planning as Life Insurance for the business.


Now that you know the most important myth, let me quickly jump into the other ones. Though there is a long list, I have covered a few of the other critical ones that I see regularly in my day-to-day interactions with founders of firms: 

1. The Only Option in Succession Planning is Exit or Selling to someone else.

However, Succession is not equal to Exit Only.

There are other ways to structure succession which are far more fulfilling to your clients as well as rewarding to you. Like everything world class, there is a process to do that and as I have repeated before the Best Time to Do it was Yesterday. The next best time is now.

But before we even think through the nuances of succession, the questions you should ask yourself are

  • What do I really need?
  • Why do I want to Exit?
  • What am I most worried about?
  • What is the Real Problem here?

A lot of people that I come across generally have a common theme “I am tired of doing this.”

In short, many are tired. Some don’t even need the money, but they just don’t want to do this anymore. This doesn’t make them happy anymore and they just don’t see a way to make this fulfilling.

So, the easy way out is seen as Exit, but the real problem is something else. Essentially exit is seen as a way to solve a very different business problem.

If you have made your mind to completely exit, a real way and the first step that you can undertake is to reimagine the firm in a completely different way right from Value Proposition, Ideal Clients to Leadership, Strategy and Organizational Design. This will not only increase the value of your firm significantly, but also build capacity and position your firm for future growth. This is what prospective buyers pay for. It’s not about your past and your current AUM; it’s all about what your business is truly capable of doing in the future. So, if you want to then exit at this point of time, you still can, but on your terms. However, this will require you to be intentional about the choices you make about your clients, your business and you.

There are some seemingly rosy offers for exit floating around and this brings me to the second myth.

2. It’s all about the Deal.

There are 3 sets of people who are impacted in a deal like this:

a. Clients

Will my clients be taken care of?

Will my clients be better off than what they are with me?

These are the 2 questions that will come to your mind as you evaluate any prospective firm as a buyer. The process of selecting the right partner has too many variables and is not the subject of this post.

Needless to say, your clients have to come out as winners.

b. Seller (You and Your Team)

c. Buyer

On the other hand, the seller and the buyers have to come out as winners too. Imagine if the seller comes out as a winner and the buyer doesn’t, do you think the clients will then come out as winners? A point that is ironic yet very critical is that you and your clients will not be a winner in this deal if the buyer loses. In fact, your clients and you will be the biggest losers in the deal (Personal Finance is more about Personal than it is about Finance). Some buyers are desperate to do the deal at any cost and some will even make a lucrative offer, but the reality is that the deal has to be a Win-Win for everyone involved.

A few questions to ask yourself:

  • What is the motivation of the buyer? Are they simply gathering assets to build valuations or for an intended exit themselves?
  • Can they truly take care of your clients better than anyone else?

The point I am making here is that a deal is not a real deal unless it’s fair and everyone wins.

3. Succession Planning is also not about hiring a couple of people and being done with.

Succession Always starts with your WHY and then it should proceed with thinking about the future of the firm and figuring out the way to build a world class firm that will be attractive to anyone.

Hiring is a part of Organizational Design, and it comes as you reimagine the future firm after you have dealt with all the other elements such as Ideal Client Profile, Value Proposition and Client Experience.

Just jumping straight into hiring people has proven to be a costly mistake for many solo firms (single practitioners) globally. They have lost significant time, energy, and capital by trying to apply a quick fix to a process driven problem.

Remember, what is frustrating you today is likely to frustrate the newer hires too.

Succession Planning is not a 1-day job or something you can just get by recruiting a few people. It is a Process and like all processes, it takes time. The benefits of a great process compound over a period of time and this process is no different.

You would be better off doing this in a structured and thoughtful way.

Finally, Succession Planning is never about age, your desire to sell, the deal terms or anything else. It is about taking care of your clients, your team, and your family. It is about caringIt is about your responsibility towards them and continuing to make a difference in their lives even in your absence.