Getting partners to transition toward retirement as they approach the firm’s retirement age is a problem facing many CPA firms, and its implications are far-reaching. Most firms in the Top 100 have a mandatory retirement age between age 60 and 66. Accordingly, partners within a few years of this age should be expected to begin the process of planning to transition client relationships to younger partners to help the firm maintain these clients. The partners should also be looking ahead to what’s next in their “second, post-retirement career.” All too often though, this does not happen.

Today’s Challenges

Instead of planning their retirements, partners approaching retirement age often look for ways to continue with the firm by making themselves as indispensable to their clients as possible. This leads to a bit of a battle between firm leadership and the partner over when he will actually retire. The result of this battle is sometimes an extended retirement age, which delays the firm’s opportunity to move clients to younger partners. This, in turn, delays new partner admissions and partner growth. The problem is aggravated where the partner resisting retirement is a low-performing partner, and further aggravated if the partner is protecting the jobs of low-performing senior managers and directors who are doing his work.

Succession planning for CPA firms

This whole process can have a chilling impact on the firm’s relationship with its retired partners who feel mistreated and unfairly cut off from the organization that was central to their lives and identities for decades. Often, managing partners delegate addressing these issues to their administrative partners. This can be a poor use of the time of these administrative partners. It can also have a negative impact on the partner being urged to retire who can be made to feel disrespected by this delegation. Not surprisingly, many firms end up with poor relationships with their retired partners rather than a vibrant retired partner alumni network that can help the firm. Firms should address these issues by adopting a partner retirement transition program that helps partners prepare for retirement over several years preceding the partner’s retirement date. Let’s look at how this could work.

A Better Approach

The key to successful partner participation in the program is to create a safe space where, several years preceding retirement, the partner can have an open forum to explore his future options in a private, confidential setting. The best way to do this is to use outside executive coaches who are experts in this area. The coach would meet with the partner several times over a four-to-six-month period. These sessions would be used to help the partner take the time to surface personal insights as to what his life following retirement will look like. The coach will also raise possibilities and make suggestions to stimulate the partner’s thinking. This can be critical because partners rarely take the time to plan for retirement until very late in the game. This process will help them think about their options. The coach will also suggest pertinent reading materials to help the partner think differently about his future and move on to embrace the next chapter in his life.

During the coaching sessions, the partner and the coach would work together to develop the partner’s retirement transition plan. The plan would have two parts:

The partner’s post-retirement plan. This will include specifics about the partner’s second career, activities such as volunteer work, and personal plans such as time with family, travel and education. If the plan includes a continued relationship with the firm, the coach would facilitate a discussion with firm leadership about how to potentially make this work. This eliminates the typical tension that arises when the partner discusses this subject with firm leadership directly.

The partner’s retirement-readiness playbook. This will detail the steps that the partner needs to take before retirement to be ready to launch his retirement plan when he leaves the firm. Some of the initial steps will often involve research and networking to get information that the partner needs to make key planning decisions. The playbook will be very specific on due dates and milestones that the partner will need to meet to be ready for retirement.

Advantages for the Firm

There are several important advantages for a firm that adopts this approach:

Getting partners to prepare for retirement rather than resist it. By starting early and engaging the partner in a process where he can think about new possibilities, the firm has greatly increased the chances that the partner will embrace retirement.

Getting less effective partners to think about early retirement. More often than not, these partners are aware that they are under-contributing but hang on as partners because being part of the firm is really all they know. Once they are able to reframe their perspectives of life after the firm in a positive way, it may be much easier to nudge them out the door.

Achieving partner receptivity to transitioning clients earlier. Prospective retiring partners can be notorious for saying “yes” to client transitions to younger partners but then doing nothing to actually make this happen. Proper coaching can give these partners a different perspective so they take action on client transitions earlier.

Engaging partners on a possible continued relationship with the firm. Early on in the coaching process, the partner will decide if he wants a continuing relationship with the firm, such as being kept on in a consulting capacity. The coach will then present the partner’s request to the firm’s leadership. The response will provide clarity, one way or the other, on this issue. This will enable the partner to prepare his post-retirement plan in an informed fashion. This will also diffuse an often-tense issue. Whatever the answer, the partner will know where he stands early in the process.

Setting the stage for mutually beneficial special arrangements. Where circumstances call for a special arrangement with the partner, either because of some challenging client transition issues or perhaps because the firm wants to shed some of the partner’s non-profitable business and is willing to let the partner keep serving these clients separate from the firm, the coaching process and the ensuing facilitated discussions between the partner and firm leadership provide the forum for dealing with such arrangements on a timely, well considered basis.

Fostering a mutually beneficial relationship between the firm and its retired partners. By making the partner retirement process a positive experience, the firm will be able to create a positive-minded retired partner group who will say good things about the firm, be an inspiration to younger partners and staff, and can be called on to use their contacts and influence to assist the firm in building its reputation and getting new clients.

Advantages for the Partners

Starting early on positioning for future opportunities that take time to surface. A good example of this is where a partner would like to sit on outside boards after retirement. This is not something where you can just make the decision and do it. Substantial advance networking and credential building will usually be required to make this happen.

• Using the coaching process to make critical decisions. Experienced executive coaches use a formal, confidential process to guide partners to face issues and make difficult decisions. This is a very valuable tool for the partner who often is not comfortable discussing certain things with firm leadership.

Discussing real concerns and ambitions in a safe place. If partners have issues with the firm that are at the root of their reluctance to retire gracefully, it’s better to let them vent to the coach who can then guide them to face reality and move through the retirement planning process. This avoids awkward discussions with the firm as well as stonewalling.

Getting help looking at the future through a fresh lens. After decades with the firm, it’s difficult for many partners to see beyond the present to future possibilities that may lead to a more fulfilling life than the partner already has. The coach can “open the partner’s eyes,” enabling the partner to see the future far more optimistically.

Connecting to best practices and exciting possibilities. Most partners will not have a good sense of what other retired partners from CPA firms have done successfully in retirement. Because of experience, the coach will be able to tell these stories and inspire the partner to look forward.

Preparing emotionally for a big life event. There’s no way to sugarcoat it. Retirement is a big deal and most partners are not prepared emotionally for the changes that it brings. Helping the partner grapple with the emotional side of the equation can make a huge difference to the partner’s attitude and emotional comfort.

Both firms and partners have a big stake in making partner retirement go well. Given the importance of this outcome, more firms should invest in formal partner retirement transition programs. As one managing partner recently said to us, ”We should make this program optional at age 55 and mandatory at age 60. The earlier we help partners with planning their retirements, the more productive and cooperative they will be in their later years.”

Richard Stanger

Richard Stanger

Richard Stanger is the CEO of StangerCarlson LLC. He can be reached at rstanger@stangercarlson.com or (646) 797-4000.
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Carolyn K. Carlson

Carolyn K. Carlson

Carolyn K. Carlson is the president of StangerCarlson LLC. She can be reached at ckcarlson@stangercarlson.com or (646) 797-4000.
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