Advisor Stories: Succession planning with John Taylor
Transcript: I am Shauna Mace, head of Advisor Services at SEI, and our mission is simple. It's to help you and your clients build your brave future through the power of connection. That means connecting you to actionable practice management tools, insights, and experts. And today I have an expert joining me, John Taylor, who is a financial advisor. In this conversation, we are going to focus on continuity and succession planning. Specifically, we're going to hear John's story and invaluable advice. So John has been a financial advisor for over 30 years. While he started on the insurance side, he quickly discovered that insurance was not for him. And over those 30 years, he's grown and evolved his practice, Greenville Financial Group. John's navigated a number of business transitions including adding a partner, staff, navigating multiple broker dealer relationships, and moving from Delaware to Del Fki Island just outside of Hilton Head, South Carolina. And most recently, he's navigated the transition of joining Paragon Wealth Management as part of his succession plan.
For John, the journey of finding his successor started with a really important question he asked himself years ago. How do I want this to end? What a great question. So let's start there, John, how do you want this to end? Well, good morning Shauna, and thanks for having me. I essentially want this to end with my clients in mind, knowing that they will be taken care of, that their assets will stay at SEI where they've been for decades, and that they'll continue to have the concierge kind of kid gloves service that they've grown accustomed to having. And I only have about 110 clients and it's a nice size practice, very boutique, and we're very customer focused. So I want that to continue after I've slowly faded into retirement and spending more time with grandchildren and doing other things.
So when did you start asking yourself this question? How long have you been contemplating and navigating the answer around how you want to ideally have this end focused on your clients outcomes? Probably about two years ago it became a much more active focus for me. Prior to that, I've always worked with John Anderson and SEI on a number of different practice aspects, and always had in mind if I saw something from FP transitions come through, I paid attention to it and started to think about, well, what would happen when I didn't want to work or if something happened to me. So a number of years ago through my broker dealer and with SEO's assistant, I got an emergency buy sell agreement just in case something happens. So the continuity would be there. I used to be an OSJ, so I had responsibilities that I needed to be able to hand off to somebody else. So that was all in place and completed, but I didn't know exactly to whom or what organization I would turn over the reins and started looking at that about about two years ago.
And so you had an emergency buy sell agreement, so you had a continuity plan, a death or disability plan in place. You shared there was about a three week period where you didn't have coverage and the worst case scenario happen. What advice would you give other advisors from that experience? Well, we were certainly glad that we had it in place, but as part of my succession planning, I had made a change to Paragon Wealth Management and was transitioning assets to them as of the end of April of last year. And so when I left the broker dealer world, I left my emergency continuity plan behind, and within three weeks of my making the change at the near the end of April, I got very ill and spent five weeks in the hospital and had a couple of near death experiences and ended up being unable to even open a computer for about three months. And so during that period of time, I didn't have anything but the hope that if something happened to me that the people I worked with would just figure it out. And I have a lot of faith in SEI and I knew that they would, but it certainly made me very nervous.
Yeah. And again, you talked about this ideal future protecting your clients, obviously, I'm sure your team. So are there any key lessons or advice that you have coming out of having had that experience? Well, I mean, I would've liked to have thought that when I did my transition that it would've come to the front of my mind that one of the I dots and T crosses that you need to do beyond simply having clients sign a change of broker dealer paperwork with SEI was to actually have a new continuity agreement put in place. And so I hadn't quite gotten around to that when this happened. So despite best efforts, the opportunity for something to have happened presented itself. But fortunately I had a good team in place. I had had a number of summer interns over the years and one of them ended up coming to work with me and has become my heir apparent, and he and my assistant just dug right in and just took care of everything. I remember my wife handing me a piece of paper when I was in the hospital and saying, you just need to sign this because you don't have something that will allow SEI to recognize your associate's signature in lieu of yours. So that was something we pulled off sort of at the hospital bedside. But yeah, we got through it and despite all my planning and thinking about things, just the timing, just I guess it's beyond your control, but certainly something to think of when you change is to make sure that that is part of your checklist.
Yeah, that's great advice and we're so grateful that you're here and you're well, thank you. But having that continuity plan in place and making sure it's in place, especially if you do make a transition, is so important. And obviously, continuity planning, again, it's a death and disability plan, a written death and disability plan, which is different than a succession plan. So again, you wanted to make sure that your client's futures were secure and they will be well served even after you mentioned a glide into retirement. Can you talk to us a little bit about how you navigated finding a successor to ensure that you had that right fit for your business and for your team and for your clients? Yes. So I started with the broker dealer that I was very comfortable with. I had a good relationship with the folks at SagePoint, part of the advisor group, and I wanted to make my life simpler. I didn't want to review trades, I didn't want to have to read emails. I didn't want to have to take my computer when I went on vacation and log on every day and do those kind of activities. So I was very interested in just becoming an investment advisor and no longer having that supervisory role. So I started with them and they said, well, maybe we're thinking about this. Maybe it's a year, a year and a half out. And I just had this sense that I didn't have that much time. So I started with a conversation with a couple of folks at SEI with and said, Hey, who do you know that might be a good fit for me in terms of a firm that is SEI centric that believes in holistic planning that could help me with my succession plan? And they each came up with a couple of names, and one of the names that I came up with was Perigon Wealth. So I talked to about five different firms and one firm. Basically the conversation ended very quickly when they said, oh, well all your assets would have to transfer over into our platform and you wouldn't be using SEI anymore. You'd be using us. And I'm like, well, that's not going to happen. Thanks very much. Have a great life. But I prefer to keep this relationship that I've had since 2006 with you all going, so I'm sorry, 1996. And then finally I just hit it off with the folks with Jeremy and the folks at Perigon and decided that they were the ones that I wanted to work with. And initially I thought about simply selling to them, and then I said, I need a little more time. Why don't I simply affiliate first? And then once we're all established and the clients see the new sign and everything else and notice that nothing else has changed, then maybe we'll bring up that discussion.
Very, very thoughtful. So you did a lot of things right? And we get these questions all the time is where do I start in finding a successor? Or if I have someone internally who maybe is interested in buying me out over time, how do I start this conversation? So first thing you did, I think you did really right, is you talked to your network, you talked to the professional partners that you trusted, in this case, some of your partners at SEI, but talking to your network or just to start to identify potential successors, the fact that you met with five, I think that's again great, having multiple options, understanding what you really want, and then determining really through that process of vetting and meeting and getting to know, being able to narrow it down to that right fit. Were there, so you mentioned red flags for you where things like there were certain non-negotiables it sounded like for you, any advice as someone is going out and potentially meeting with successor, a firm that they may view as a successor, any advice as far as how you should think about vetting that potential partner? Well, yes, and I think I did do it right in terms of reaching out to my broker dealer first and seeing what the options were there and then not feeling real comfortable that I could assure my clients that as little change would happen as possible, meaning they would stay with SEI, they'd have my staff, they'd have my office. Those things were important to me. And I also went to FP Transitions and I did the work to have a valuation done so that I had a baseline for what I might expect when I went out and had other firms get to the point of wanting to make an offer. And I did receive a few offers out of the five conversations, and one of them was our firm would sort of leave its office and go into their office, and I just was worried about keeping our culture. I was worried about my wonderful staff being able to stay in place and just too much change. And even though they were great SEI advisors, just terrific advisors with SEI and very good people, I wanted to maintain that culture that I had had for decades. And so Perigon ended up being just that correct fit for me because they wanted to keep my culture, they wanted to keep my office. Really the only change was business cards and signage and that I would be part of their website as opposed to having my own. And the statement changed. But otherwise, everything else, how we ran our practice, how we used E-Money, how we used Riskalyze, our involvement with SEI, none of that changed. And that was the most comfortable for me in terms of the least amount of disruption to my clients and making sure they had the continuity of working with my associate, Lisa and with Clay and Rick and Will and my team.
Yeah. Again, you're doing all these things really right, so we're very grateful for you to join us and share those steps that you took. I was going to ask if there were individuals or partners that were especially helpful. You mentioned FP Transitions, so they're one of our strategic partners. They're a business transition consultation firm. They do valuations in working with them. Are there specific things that were important? You mentioned valuation, but other things as well that were important in order to formalize that succession with Perigon? Yes. They presented the whole landscape to me in terms of I could work with them and they could put it out there to the universe and say, here's this firm in Delaware, and broaden my brush. And I wasn't comfortable with that. I wanted to keep it in an SEI specific universe. I wasn't interested in selling the practice to some firm that would just absorb us and Lord knows where it would go from there. I guess I wanted to just control it a little bit better. And so it really comes back to my relationship with SEI that goes back nearly 25 years of wanting to maintain that for myself and my firm, but also for my clients. And so they were good to show me the whole pallet, but then they helped me then say, okay, if you're going to stick with that, then here's the valuation and here are the different methodologies for evaluating a practice, and here's some things that you can do. I did stumble the first time when I gave my figures to a firm. I forgot to take out all of my John's specific expenses, and they weren't thrilled with my ebitda. And so I would've liked to have known about that before and would suggest that people do make sure they know what the firms are going to be looking at. And so I learned the hard way, but again, no regrets. I'm thrilled with Paragon and moving forward with them.
Yeah, that's great. I was going to ask you if there were any mistakes. You just mentioned one. Are there any other that or lessons learned that you would think are important for advisors? Yeah, that was a big one. So I've been a spreadsheet guy forever, quarterly. I update where my expenses are on an annualized basis and where my revenues are and what things look like. And I put all the expenses from cell phones to car leasees to everything like that and just didn't think to strip those out before offering it. And obviously that firm didn't look beyond to say, oh, well, let's this up a little bit to see what the core expenses are. And so that told me something about that firm as well. So I think it all worked out the way it was supposed to work out.
Yeah, absolutely. Again, I think starting with the end in mind seems like a really great first step. Again, that question of how do I want this to end gave you a very clear vision as to what you wanted and who you wanted to partner with. And even if you didn't know every single where it would land and every single step along the way, you were very clear in what that ideal future state looked like, which is a great place to start. And I think probably for a lot of advisors and just people, it's hard. Thinking about that next phase in your life, do you have any advice about maybe the emotional side of having to do this sort of planning? No one likes to do estate planning either. It's not fun to talk about. What, if any advice around how you not only did the work, but how you took action on the work. Well, it certainly is and a difficult thing to get your head around. And in practical terms, it's difficult as well, because when I go up and I see clients in Delaware and I tell my associate who's going to be sort of taking over, managing that hub to sort of run the meetings, I have a really hard time shutting up. And so that's something we're going to have to work on at the ground level. But at the 30,000 foot level in terms of getting started with the process, the continuity's easy because you assume nothing's going to happen to you and you're going to be fine, but when the reality comes in and you get hit by that bus then, and it's really not hard at all. I mean, if it happens to you and you get through it, it's really crystal clear what's important to you. Before that, it's really you just hear about different things. I've been on at SEI conferences and heard people talk about it, and it's always somebody else and you say, yeah, I got to pay attention to that. And it's maybe item number 42 on your 50 point to-do list. But as you get closer and you get older and you're like, well, I'm going to qualify for Medicare here. So you just start to think about it naturally. And then of course, if the event occurs to you, it's top of mind in your face every day. Yeah, don't wait to get hit by the bus. Right, right. Luckily it turned out okay for you, but don't wait. And I guess it sounds like too, it's a little bit of, if you can't, maybe if it's hard to do it for yourself, do it for your clients, do it for your team, do it for your family. Correct. And I had sent the book out to probably half of my clients either mailed it to them or handed to them in meetings. And now when I see 'em up, I say, Hey, have you read the book yet? And if they tell me no that I get the copy out and I remind 'em if there are buses out there and I personally got hit by one, so please, please dust it off and get on it and go from there. So I am pleased to say that I did sign my LOI, so that is now completed with Perigon, and we hope to complete the transition first phase by the end of this quarter. And then there'll sort of be a stay in place for another year as we transition.
And that's an important point too, is a transition doesn't mean it's like not like a light necessarily. It doesn't have to be a light switch. You're working, you're not working. Usually these things are gradual and you get to determine what that glide path looks like in your succession planning with whoever your partners are. So John, this has been so helpful and invaluable. I'm interested for any last key takeaways for advisors who want a say in their future for their clients, for their business, their team for themselves, what last pieces of key advice do you want to leave us with? Start early. Make sure you have the continuity in place. Make sure you make any changes, that it's the top of your list to make that change, that continuity agreement as well. And always think about how you want your practice to grow and who would take over if something happened to you, and then who would take over if someday you're ready to just work less, move on. And I'm still trying to decide what am I going to do when I'm working less? And we made the decision to pay team members to come on and sort of offload some work, and I got rid of some responsibilities, and I like just being an advisor with my associates and I don't supervise them. We're on the team together, and now I just got to figure out how to slowly do the rest of it and pick up something else instead in the nonprofit world. But we'll work on that. We'll get there.
Well, I can't wait to hear where you end up and where you land next. They're lucky to have you, John. Thank you so much for sharing your experience, your story, your advice. Again, there's a lot of things that you did very, very right, and I'm so glad that you've ended up in this place where you are seeing out that vision of where you want to end. It's happening, which is exciting. So thank you again for joining us. If you have questions around succession, if you need resources, again, we work with partners like FP Transitions, we see and talk to a number of advisors like John, who are either contemplating or in the midst of navigating a succession. We are happy to help from a practice management perspective as well as a resource perspective. So if there's anything we can do to help, absolutely, please reach out to us. We would love to help you in the way that we helped John. John, again, thank you so much for joining us, and thank you for sharing your valuable insight.