Succession Planning

Start business succession dialogue ASAP

Advisers and accountants should commence conversations about business succession much earlier in the cycle in order to implement and execute the transition and their wishes as intended.

“Each of you will have a number of clients with businesses which go through these stages: introduction, growth, maturity and decline,” Shadforth Financial Group Victoria and South Australia state advice leader Jason Rawlins told the Institute of Public Accountants 2018 Victoria Congress in Lorne, Victoria, today.

“The key driver of the success of wealth maximisation strategies during succession planning, and also making sure you can implement them, is having these conversations earlier rather than later because typically it only happens when there’s been a [health] scare.

“Starting the conversation during the earlier stages of growth means they are used to the idea of planning for things and also as we see clients grow their wealth through their business, we often get told that their business is their super as they’ve neglected their super and managed funds.”

Furthermore, there was usually a disconnect between the projected estate plan and what actually occurs, so setting a tight estate plan and redirecting assets, such as superannuation, was appropriate during the growth stage, he said.

He highlighted there were critical opportunities to address these issues for clients.

“The earlier you start this conversation from an advice perspective as the trusted adviser, the greater the likelihood that you can give them an understanding of what their options are,” he noted.

“The biggest risk was that the conversation did not happen or happened too late.

“Having an appropriate business succession plan means that the number of opportunities for the business to evolve during transition are considered, are planned for, and decisions are made around what happens and who’s responsible.”

Ultimately, business succession for clients should be a clear set of guidelines, he said.

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