How Preparing for a Partner’s Death May Have Saved This Company
July 13, 2017
Steve Ciepiela was in his garage on a May morning in 2004, about to leave for work, when his office manager called with shocking news: His partner had suffered a brain aneurysm.
Within 24 hours, Charles Severino — who, with Ciepiela, co-founded the advisory firm Charles Stephen & Co. in 1983 — was dead at 48. “It was unbelievable,” recalled Ciepiela. “You run through a lot of emotions.”
Ciepiela and Severino had prepared for unwelcome eventualities: They’d signed an agreement to allow the surviving partner to buy out the business if one of them died, taking out life insurance policies on each other to fund the purchase. Their Albuquerque, N.M., company got through the shock.
That preparation may have saved the company. Had they done nothing, Ciepiela says, he likely would’ve needed to sell it after Severino’s sudden death.
Ciepiela’s experience shows how complex it can be for advisers to navigate unexpected events while caring for their customers, their employees, and themselves. It also illustrates the need to plan for the worst.
“Even though we prepared well, it was still stressful,” he told MarketWatch. “When you lose a partner, you lose a support system.”
Charles Stephen & Co. had eight employees when Severino died, and Ciepiela sought to reassure them about their job security. He also enlisted a grief counselor for himself — and his staff.
Clients needed reassurance and counsel. Meanwhile, Ciepiela faced the emotionally wrenching task of consoling Severino’s widow and two children even as he was looking after his own wife and children. “Chuck was a big presence in all our lives,” he said.
Ciepiela soon found himself working twice as hard to fill the void left by Severino’s absence. Each partner brought specialized knowledge and expertise to the company, and Ciepiela realized that he’d need to refocus to assure its long-term viability.
For example, the firm had served as a third party administrator for retirement plans. Ciepiela sold that piece of the business and reassigned some employees.
“I had to reorganize the company, the staff and our clients,” he recalled. “I had to decide what we weren’t going to do anymore.”
After a dicey two-year stretch, Ciepiela stabilized the company for the long haul. It not only still operates, but retains its original name.
To help other advisers, Ciepiela in 2005 wrote a 15-page booklet summarizing his experience, “When A Partner Dies…” In the booklet, he emphasizes the importance of succession planning and establishing a business continuation plan — a topic many companies ignore or postpone.
“When a business owner dies, too often the business dies too,” Ciepiela wrote. “Not because anything wrong has been done, but because nothing has been done.”
When asked about the biggest issue facing the financial planning industry in 2017, less than 1% of respondents cited succession planning, according to an InvestmentNews survey.
Challenges arose again in 2010, when Ciepiela’s son Adam, then a 29-year-old junior adviser at the firm, needed a kidney transplant. His son John, 22, was the donor. “I had two sons on the [operating] table at the same time,” he said.
Adam’s recovery hit roadblocks as he suffered from severe septic shock and pancreatitis after the transplant. Today, Adam is a full partner.
Today, Ciepiela’s company — which now has 11 employees — is even better-prepared to withstand shocks. Teams of advisers and support staff work in tandem to address client needs and provide ongoing support. As a result, he says, the company’s survival does not rest on one person’s shoulders.
“Whether they vocalize it or not, clients always wonder, ‘What happens to me if something happens to you?’,” Ciepiela said. “Our clients know we have a plan in place for continuing to serve them.”
Now 63, Ciepiela credits his wife, friends, colleagues and clients for helping him persevere. And he credits his years playing football at the University of New Mexico undergrad, which he said sharpened his competitive edge.
“You learn that if you’re down, you’ve got to play harder to win,” he said. “You’ve got to fight through adversity.”
You can find the original article on the MarketWatch website by clicking here.
Morey Stettner is a writer in Portsmouth, N.H. He’s the author of five business books, including ”Skills for New Managers,” published by McGraw Hill. Email him at email@example.com.