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Succession Planning to Prepare for the Worst

July 17, 2017

Many financial advisors do not put enough emphasis on succession planning and business continuity policies — and failure to do so can wipe out even those who have done everything right otherwise, MarketWatch writes.

Advisors Steve Ciepiela and Charles Severino, who founded the wealth management practice Charles Stephen & Co. in 1983, did prepare for the worst, the publication writes. They signed a contract permitting the surviving partner to buy the other out in the case of one of their deaths and ensured they’d have the money to do so by buying life insurance polices on each other, according to MarketWatch. So when Severino suddenly died in 2004 at the age of 48 following a brain aneurysm, Charles Stephen & Co. survived, the publication writes. If it hadn’t been for their prep work, Ciepiela tells the publication, he would have had to sell the practice, harming its eight employees at the time and all of their clients in the process.

Nonetheless, even with the succession planning in place, Ciepiela had to make adjustments, according to MarketWatch. Part of that was hiring a grief counselor for everyone at the firm, the publication writes.

But with Severino’s expertise no longer available Ciepiela also had to overhaul the business, selling the part of the practice that acted as a third-party administrator on retirement plans, according to MarketWatch. Since then, Ciepiela further prepared his practice against unexpected events, assigning advisor teams to work in tandem to ensure that clients’ needs are met no matter what happens, he tells the publication.

By Alex Padalka
  • To read the MarketWatch article cited in this story, click here.