Journal of Financial Planning: October 2016
Advisers deal with pre-retirees every day. Some of these clients are anxious to quit working, but many more say they’d like to work in some capacity once they retire. The 2015 “Work in Retirement: Myths and Motivations” study, conducted by Merrill Lynch and Age Wave, found that seven in 10 pre-retirees want to work in retirement. In fact, it’s becoming so common that people now talk about “Retirement 1,” “Retirement 2,” and “Retirement 3,” with each stage representing a reduced schedule and set of responsibilities.
For financial advisers, this is easy to understand: “dying with your boots on” is an industry norm. Work in retirement may be different or happen at a different pace, with many tenured advisers putting in fewer hours and taking more time off, including sabbaticals. In any case, there’s a clear trend of advisers staying in the business longer—or not leaving at all.
The problem is when you slip into retirement mode without even realizing it.
Maintaining a Viable Lifestyle Practice
Many advisers are comfortable with the idea of running a lifestyle practice but bristle at the suggestion that they’ve entered “Retirement 1.” Whatever you call it—Retirement 1 or a lifestyle practice—there are several key points to consider if you want to keep your business healthy.
Am I still growing? By definition, healthy businesses are growing businesses. In our profession, that’s generally measured by assets under management or overall production. At a certain point in an adviser’s career, it becomes difficult to recruit new clients. Existing clients pass away or move into the distribution phase. Attracting new business to replace lost AUM becomes challenging as clients seek an adviser who will outlast them. When AUM starts shrinking, the business owner needs to assess whether the practice has begun to die on the vine, making it less attractive to potential buyers.
Am I keeping up with industry developments? Regulatory requirements, new technology, marketing strategies, emerging products that deliver answers to complex client issues—staying on top of all the developments in our profession requires a certain amount of time and commitment. Downshifting to a lifestyle practice shouldn’t mean letting your focus slip or becoming nonchalant about certain aspects of the business.
Do I have a documented continuity plan? No matter what kind of practice you have, going without a written continuity plan borders on unethical. The need for a continuity plan is well known, but unfortunately, many advisers still don’t take this essential step to provide for their firm’s (and their clients’) future.
A Personal Choice
Mid-career advisers may observe the attractive lifestyle of more tenured advisers and think, I want that, too! For their part, millennial advisers entering the profession may look around and assume a lifestyle practice is the norm. But if significant growth is on your agenda (and for many younger advisers, it is), the activities that will get you there generally require putting in some evening, weekend, and summer work.
Of course, how you balance work and life is ultimately a personal choice. In the independent world, as long as you’re compliant and your clients are protected, it’s no one’s business but yours. Just be sure you’re making the decision deliberately rather than simply falling into it.
Joni Youngwirth is managing principal of practice management at Commonwealth Financial Network in Waltham, Mass. She is a regular contributor to the FPA/Journal of Financial Planning Practice Management Blog.
This article originally appeared on the FPA/Journal of Financial Planning Practice Management Blog. Read more of Youngwirth’s posts at PracticeManagementBlog.OneFPA.org.