Do Your Financial and Tax Professionals Have Succession Plans?

You have a contingency plan in place for your family, but what about your financial advisor and tax planner?

Operation London Bridge was the code name of the state funeral plan for Queen Elizabeth II. The series of events, protocols, processions, and music reflected meticulous preparation over the course of decades with exacting attention to every detail. 

The funeral and all its activities for one of the world’s longest-living monarchs were planned. The memorial service made me think of then-young Elizabeth II’s first prime minister, Sir Winston Churchill, who observed, “He who fails to plan is planning to fail.” 

Funerals are inevitable. Other events are predictable as well. The women and men whom you entrust with your financial documentation should have one. But do they?

Poets and songwriters remind us how fleeting life is. We have been warned. Relying on others to be accountable can be perilous not just for ourselves but our loved ones.

Your financial planner and tax professional may retain your personal information used in making financial decisions or filing your taxes, but can those trusted agents be relied on with certainty when it needs to be retrievable in the future?

There may be a real danger in completely outsourcing historical information to others. What happens to your printed and even digital information when your Certified Financial Planner® or Certified Public Accountant maintains a one-person office and she is the victim of a fatal accident? What happens if his office experiences water or fire damage? Are your records vulnerable?  

What happens to the passwords of a solo practitioner? Where are those items located if he or she maintained backup copies of your records? Is anyone appointed and attuned to your needs to serve as a replacement for him or her?

A financial advisor or tax professional who is independent and not affiliated with a large firm is attractive to some because of the belief or hope such an advisor is inexpensive. There is no guarantee, however, that the fees for services will be low just because a person works independently. A counterargument could even be made to even expect higher fees for such “lone rangers” as their practice does not enjoy economies of scale. 

Others seek out a financial advisor or tax professional who is independent because there is an attractive belief that such a person’s independence saves them from being a hostage to corporate groupthink for designing all portfolios the same or being concerned with focusing on a large number of clients. Employment within a large investment or a tax firm, however, also may include easy corporate access to in-house estate planning or elder care specialists when needed. 

Some seek out a financial advisor or tax professional who is independent because they are concerned with privacy and want to be assured of a personal relationship with an individual who may share some bond like faith, fraternal, or former military association. 

Be careful when seeking out a professional when the criteria are more about a shared connection while minimizing the professional expertise. Remember what Chairman Mao replied upon being asked, “What is the best color for a cat?” His reply was, “I don’t care if it’s a white cat or black cat. It’s a good cat so long as it catches mice.” 

When seeking out a financial advisor or tax professional ask, “Are you a fiduciary?” You have permission to ask, “How are you compensated?” And you also should ask, “What is your succession plan?”

One should always engage a financial advisor with the idea of succession in mind for your family as well. If there is an heir apparent to the practitioner, will she or he be the best fit for your family members? 

A known successor to your financial and tax professional team who will work well in the future for your family when you are gone will provide great peace of mind. You also are practicing a form of estate planning by elevating this issue at the front end of assessing competent candidates for your business. Think of how well a professional will work with your family after you are gone and for their needs as well. Your family will be well served and your legacy will be assured.

About the Author

Francis Xavier (FX) Bergmeister, CLU®, ChFC®, CASL®, ChSNC® has been Certified Financial Planner® for 30 years. He is a graduate of the Wharton School and earned a Doctor of Arts from George Mason University. He provides retirement seminars thru Federal Career Experts.