I’ve heard both sides of the retirement argument: mandatory and elective. It’s a tough call for professional services firms. However, whether your firm has mandatory or elective retirement, the biggest risk to a firm’s bottom line is succession planning and specifically, transitioning clients. Oftentimes, due to the success of a firm and the longevity of client relationships, succession planning has been avoided. In fact, to mitigate risk, succession planning should be even more relevant particularly given recent demographic trends, which have shown that an ever-increasing percentage of people are at retirement age.

How clients are transitioned to a new client team or lead is necessary to manage the risk of client attrition. Marketing is expensive, so to get the best return on your investment you need to work hard to keep the clients you have.

What has been discussed so far? Is retirement contractually obligated? Is the process of client transitioning captured in that contract?

Retirement is a difficult subject to bring up. Many nearing that age or stage are not comfortable discussing what’s next. It means addressing uncertainty and mortality. High achieving professionals also tend to wrap much of their identities up with their careers. What this means is that it is even more important to have these discussions as soon as possible, before a professional or client leaves the firm. It is also important that you talk to your clients during any succession planning. Make this a two-way dialogue and work towards shared goals. Transitioning clients should take years to be effective. And, you might not get things such as the new client lead right the first time.

The simple way to do this is to have a formal transition plan in place for any client lead planning retirement.

How to Begin

Start small. Start by transitioning a few key clients, for a few key professionals. Let’s face it, some clients are more important than others. And, frankly, the same goes for retiring professionals.

In a larger firm, strategic planning is necessary at each of three levels: the firm, the practice group (business unit) and the individual partner.  Each of these groups might have slightly different priorities and it is important to address each of them. Consideration should be given to client’s needs and internal competency, profitability and competitiveness. Financially, a framework should be put into place to compensate retiring professionals as well as successors so that everyone is interested in retaining and expanding client relationships as well as staying motivated to remain with the firm and their best interests.

Basic Elements of a Succession Plan

Reach agreement with the client lead on a succession plan. Discuss each client specifically. How long will the succession plan take? 2 years? 3 years? More? Include the practice group or business unit head.

Identify the opportunities and existing engagements at each client and the corresponding current and future capabilities. Does competency exist in all areas?

Find the new client lead­. Have that person shadow the lead partner. Gradually have them take the lead so that the lead partner is now the shadower. With a robust client account strategy, this person is, ideally, not a stranger to the client

Set measurable benchmarks for progress.

Importantly, identify the person to create and manage the process, thus, ensuring the success of the program.

Talk to your clients

Let them know what is happening and that you are working through a transition period. How will this be good for them? What are the benefits?

Schedule regular check-ins. Get their feedback on how things are going. Do they work well with the new client lead? Do they have any concerns?

Adjust as needed.

Lastly, document the plan putting measurable benchmarks in place. Include the client and revise as necessary. This should all result in a long lasting and beneficial relationship for both parties and mitigate the risk to the firm of losing clients, or having unhappy retirees.

About the Author

Shari Robinson in the founding partner of Client Development Strategies which uses successful client-focused business development and marketing methodologies to increase revenue.