What a Venerable Retiring Client Taught Me About Succession Planning

This is a true story of a retiring, founding partner of one of the best, most successful firms I have ever had the privilege of working with. His name is Doug Dean of Dean Dorton in Lexington, KY. The firm today has annual revenue exceeding $40M and 260 personnel and has received a continuous stream of accolades for years, including Accounting Today’s “Top Firms To Watch.” Doug founded the firm 42 years ago.

I always tell people I’m one firm smarter than the last firm I worked with because I learn from every firm I consult to. I’m not smart enough to know best practices all by myself. My clients hire me for my composite of hundreds of experiences with CPA firms from coast to coast, large and small, over 20 years. This blog recounts one of those magical experiences where I learned something from a client that has stayed with me to this day. In fact, I have cited it dozens of times (of course, without naming names) with clients ever since that moment.

I had an “aha” moment with Doug while facilitating his firm’s partner retreat about 15 years ago and an experience at that meeting stands out like a shining beacon throughout the voyage of my career. It’s about succession planning.

At the time, Doug’s firm, Dean Dorton, had quite a number of young, new partners. One of them (who is still a partner at the firm today) brought up the fact that Doug was such a dynamic force in the firm’s success, pointing out how he had a very close relationship with many of the firm’s larger clients. This young partner wondered how the firm could possibly retain these clients when Doug retires because of his client relationships.

Doug responded by saying that he was very careful to involve other people in his clients (including the young man who asked the question) so that the clients were not Doug Dean’s clients, they were the firm’s clients. I’m not sure if Doug used this term (he probably did), but he essentially said that it was his practice to “institutionalize” his clients. Other firms refer to these “other people” as multiple touchpoints with the clients. The acid test was: “If Doug should suddenly leave the firm, will his clients stay?” He told the group that for him, the answer was “yes, they would stay” because the clients valued so highly the other people he got involved with his clients. This involvement of other firm personnel was not limited to pumping out billable hours but establishing meaningful relationships with the clients as well.

An interesting perspective of this magic moment was that Doug, at the young age of 55 or so, thought he might retire at 60. Since Doug is now 72, he obviously did not retire early and I’m sure his firm is better off for this.

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Rosenberg observation:  If you ask partners when they plan to retire, the response varies dramatically depending on their current age. Ask someone who is 40 and they will say retirement will be at 50. At 50, they plan to retire at 60. At 60, they may plan to retire at 65. And so on. My anecdotal experience is that well under 1% of all partners at local CPA firms (i.e., not national and large regional firms) retire before 65.

David Bundy, Dean Dorton’s President and CEO said: “He leaves a tremendous legacy of service to the firm. Doug established a strong foundation that we can continue to build from to help us continue to be a firm of the future.”

Says Dean: “Among the most personally rewarding experiences during my time with Dean Dorton have been participating in the development of outstanding young professionals.”

When I talked to Doug recently, he added: “If you want to stay near the top of your game professionally, allow younger talent to grow into the highest leadership positions in your firm and in client relationships.”

There are 3 critically important roles that partners should play in their firms:

(1) nurturing client relationships while providing world-class service

(2) bringing in business

(3) developing people

I’m not sure if any of these traits are more important than the other, but the one I consistently see neglected the most at local firms is the development of people while helping them learn and grow.

So, the takeaway of this blog is for partners to truly understand the critically important role they need to play at their firms – the mentoring and development of people into leadership positions. Thank you Doug for showing me the way.

Point to ponder and a recommendation: My experience is that most partners’ assessment of their people development skills is much higher than they actually are.  One reason for this:  Show me how your partner compensation system pays partners handsomely for mentoring and development of people. Most local firms are hard-pressed to demonstrate this. My experience is that most firms will say their staff is just as important as their clients, but the weighting of their client achievements vs. their success at developing staff doesn’t support what they say.

Postscript: Not surprisingly, Doug isn’t marching off in the sunset. He is starting a new office for an independent trust company and building a team of estate and trust attorneys, investment professionals and financial planners to provide fiduciary, investment and planning services to wealthy families. Good luck Doug!