A majority of advisory owners lack a succession plan. According to Cerulli and Associates, less than 20% of advisory firms have a plan for operational continuity of their enterprise in the event of the death or disability of current leadership.

Investors are rightfully concerned about what happens if their advisory firm is no longer willing or able to assist them. They depend on their advisors and a sudden and unexpected interruption of advice and guidance can be very disruptive. We believe that having a viable succession plan is part of our fiduciary duty to our clients.

Cassaday & Co.’s Chairman and CEO Steve Cassaday recently addressed concerns regarding his retirement plans and Cassaday & Co.’s succession plan:

After spending time with a life coach several years ago I have great clarity about my plans regarding retirement.

Through a series of exercises, life coaches helped me figure out what I would do if I could do every day what made me most happy. This was more difficult than it seems but after a few sessions I came to some interesting conclusions:

I enjoy:

• Solving problems and being challenged
• Meeting new people and getting to know them
• Helping people
• Working with energetic, interesting, and intelligent people
• Spending time with my family

This is what I do every day at Cassaday & Co. Working together with a team of incredible professionals, meeting new people, and helping them with their financial issues is the most enjoyable thing for me. My colleagues are like family to me and I get to spend time with my three sons every day. Mary and I are also doing a lot of fun things together as well. I live a very balanced life and I am very happy in my current situation.

I think it is reasonable to expect that I would slow down in the next 15 years but believe that I will be active in the company until I am no longer able to be. When that time comes, either by choice or otherwise, we have worked systematically to ensure that the mechanisms are in place now to assure uninterrupted service for our clients.

Assuring continuity of the firm has been a top priority for me for many years.

We have put a Leadership Team in place so that I can spend less time actually running the company and more time doing what I love most which is helping clients solve problems. The members of the team, led by President & COO Allison Felix, currently run the day-to-day activities of the firm, and they presently have the ability to run the company if I am not around.

This group assists me in the operations of the firm and would provide continuity of governance in the event of my death. Their average age is 43 years, so they will be there for our current clients certainly for another 25 years or more and we are already mentoring the next generation.

Our team is intentionally structured to provide you and your family with a lifetime of advice and guidance, assuring your financial plan spans decades and generations.

We have trained our entire team to work collaboratively, share ideas, and trust one another. One of the reasons our firm is consistently cited as a Best Place to Work is the fact that all employees are encouraged and trained through empowerment, accountability, and interpersonal skills to think like owners. This approach was deliberate and designed to develop leaders who are used to working together and can be counted on to continue our culture for decades to come.

In the event of my death, we have an agreement in place that provides for the orderly transition of ownership of Cassaday & Co. This agreement is bound by contract and provides a payment to my estate in exchange for the shares of the company and assures a seamless transfer of ownership. The payment is made by an insurance policy which is paid for by the principals, Justin Harris, Christopher Krell, and Chris Young who currently own 10% of Cassaday collectively. In the event of my death, they would then own the remaining 90% of the company.

Having a succession plan in place is great, but making sure it works is even better.

We check our succession team’s readiness by running drills where top management goes ‘off the grid’ for a full week This exercise allows our employees to test their ability to operate independently of leadership.

Another frequently asked question is what if we sell the company to an outside entity. Although this is possible, I consider it unlikely. Our independence is one of our primary strengths and unless there was a compelling “value add” for clients we would not consider a sale. Money is really not the issue here because we believe that the company is worth more than anyone would be willing to pay. If there were ever a liquidity event, I would be more likely to sell the firm to employees to more fully assure preservation of our systems, methods, and culture.

If you should have any questions regarding this topic, please do not hesitate to ask your advisor or contact our team.

For more on Cassaday & Co.’s succession plan, click here.