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Key Bank Builds Flexibility into Succession Plan

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Key Bank's biggest, most-tenured producers had no idea why their boss would ask them to stay an extra day at the bank's annual financial advisor educational symposium.

It turned out to be for a very good reason. Marc Vosen, their boss, had pulled together a succession program for advisors who planned to retire and ease out of the business, and he wanted to get their opinion. 

"I put it out to them and they liked it," Vosen, president and CEO of Key Investment Services, said.

In 2014, a year after meeting with producers, Vosen officially launched the five-year program. The firm's longest-serving advisor immediately took "a bite on it" and is already in year two of the program. Vosen declined to disclose the advisor's age, saying only that he was "north of 60."

"I want these people to be able to stay here, build a career here with managed money and be able to retire out of here," Vosen said. "Most programs don't have a retirement plan for folks. They just leave and go somewhere else."

The program is designed for high producers, those who would qualify to have a junior broker, Vosen explained.

Indeed, as part of the five-year succession program the retiring advisor must work with a junior broker for at least two years before starting to transition his or her book of business.   

For advisors who don't have a junior broker, the first step is to find someone and get that person involved in the business as a partner.  This would give the junior broker time to become acquainted with the older advisor's customers and book of business. The two would decide between themselves how they will share revenue during this two-year period.

"We leave that up to them," Vosen said.

After this initial "getting to know you and your customers" period, the retiring advisor starts to phase out of the business.  In year three, whatever revenue is generated from the existing book of business is split 25% to the junior broker and 75% to the retiring advisors. In year four, the revenue is split 50/50.  In year five, the junior broker receives 75% of the revenue and the retiring advisor 25%. 

Beginning in year three, any new business that is generated goes 100% to the junior broker.

After year five, the two partners can make whatever financial arrangements they like should the retiring advisor remain with the practice in some way. The retiring advisor, for example, might work part-time or work out some other arrangement.

"It's between the two of them," Vosen said.

Key Bank's brokerage unit has about 20 advisors who may want to "take a peek" at the program, according to Vosen. The unit employs 232 advisors.

Vosen anticipates that more people will participate in the program over the next five years as they near their retirement.

"People eventually want to slow down or retire. This gives them an opportunity to do that but still work with us and their clients without a lot of disruption," Vosen said. 

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