At a recent conference I was asked to speak at, a discussion arose regarding how to convince the Senior Generation business owner to turn over control to the Next Generation son or daughter in the business. This is not an uncommon discussion in the financial services world — and for good reason. The Senior Generation may hold on too long, the Next Generation may not be able to realize some of the fruits of their labor until they reach retirement age, avoiding the topic may result in poor or no business succession planning, etc. But there’s also a bit of a bias in the conversation — at some point the Senior Generation is just going to have to come to terms with the fact that they’ll need to step aside. But do they have to?
I suspect that most or all advisors, whether in the law, accounting, investments, insurance, or whatever, have clients who continue to seek to grow their wealth when they already have more than they could ever (or at least ever want to) spend. Probably all of those clients have been told more than once to sell the business or hang it up and enjoy retirement. Yet they keep at it. Certainly ego can be a driver that keeps some from retiring. So can fear of losing one’s identity or vitality. But what if it’s something else like the conviction that the best use of their talents and abilities is to stay in the game?
My point is not to bash retirement. Some take to it quite well, but others don’t. Regardless, who is to say there is one standard for when we are to cease business or investment activity? While some may choose to stay in the game for narcissitic reasons or a need to control or minimize the opportunities of the next generation, I believe that most often (at least in my particular client interactions) “staying in the game” is driven by a desire to be productive. Indeed, there may be a moral compulsion to continue to utilize one’s gifts, talents and abilities at work.
If that’s true (and I certainly invite disagreement or challenges to the above notion), then it seems we need to have a new platform for succession conversations. Here are a few thoughts on the subject:
- Both senior and junior generations need to have an authentic respect for one another, and that respect needs to be interwoven into all succession activities.
- The senior generation needs to value the junior generation’s ascendancy, while at the same time the junior generation needs to not seek supremacy. To put it another way, ideally power is not a measuring stick in healthy relationships of any type.
- The impact of longer lifespans must be factored in. It is not uncommon for one generation to remain viably productive until into their 70’s and sometimes beyond. That means the prior generation, if only one position of leadership is available, might not be able to have as significant impact as it would like until its members are in their 50’s or even 60’s. Paths to meaningful (from each generation’s perspective) contributions prior to that point should be developed and implemented.
- New models of governance may be required beyond populating the Chairman of the Board role and the President’s role.
- Each generation should desire maximum contributions from the others.
- The generation to come, and their opportunities, should be part of succession activities even before they are able to directly participate in them.
What might you add/subtract/change in the above list?