Succession planning

By Jade Shelton

The situation

John is in his mid-50s and runs an engineering business, which his two sons also work for. Despite the business’ success, John had started to lose the enjoyment he once felt for his job. He was beginning to consider the possibility of retirement, so got in touch to discuss his pension planning.

The business had been doing well for a few years and John had been able to save money into his pension; however, this had been on an ad hoc basis with no real strategy behind it.

Despite John coming to see us with questions about his pension, it soon become clear that there were other issues too. John had no clear succession plan; it had been assumed that his eldest son would be the natural successor, but this was not based on anything other than some conversations over Sunday lunch.

John was worried that his son may not be able to keep the business in a successful position. John’s family were growing frustrated, and arguments had ensued. The brothers weren’t getting on and John’s relationship with his wife Sally was suffering. John was afraid of getting it wrong and further damaging the family. He didn’t know where to turn.

Why did John get in touch?

John had also become disillusioned with his existing adviser, who only seemed to tell him which of his funds were doing well against their benchmark and which ones needed changing every six months. John felt the whole service was lacking coherence and direction.

John had been recommended to us by his friend and fellow business owner, Steve. Steve was an existing client of ours and recommended us to John; we had also helped Steve with his own succession planning, and Steve felt that John could benefit.

What we did

We dealt with John’s situation in two ways.

Firstly, we engaged the family to help them overcome the issue of succession planning. In the discussion that ensued, we uncovered that John’s eldest son felt underprepared to take on the business and the youngest son did not want to report to his older brother.

The management team felt as though John no longer paid attention to their wishes and were considering leaving. However, following some extensive work with the both the family and the management team, a succession plan was drawn up. This gave clearly defined roles for all and tackled the majority of concerns that had been raised. The business recovered, and the management team were reenergised.

Secondly, we worked with John to create his own financial plan. This gave his pensions and investments renewed purpose. John was able to make plans that kept him involved in the business as a Chairman, but also allowed him to pursue his own dreams and retain a sense of identity.

The results

Fortunately, John’s family made peace. They now have much more confidence in the future of the family and the business.

John now also feels confident in his retirement plan, which both his family and team are fully on board with. We also helped John with some of the emotional issues outside the business, such as how he would retain a sense of purpose and identity in retirement.

John’s sons both feel much better prepared for the upcoming transition. They now have a vision to follow and are both motivated by what the future business might look like.