The Advisor’s Retirement Blues
Winding down a long and successful career often comes with angst. Follow these steps to make the process a little bit easier, Bob Veres says.
Winding down a long career often comes with angst. Follow these steps to make the process a little bit easier.
AS A NEW YEAR BEGINS, LET’S TAKE THE OPPORTUNITY to assess one of the more painful traumas advisors face in their careers — retirement.
It’s probably safe to say that when most successful advisors started growing their businesses, they had no idea they were creating something that would be so demanding of their time and energy.
But as they grew accustomed to the long hours and never-ending mind share, they probably didn’t realize quite how messy things would become as they came closer
to the end of this long process.
The thought of scaling back and giving up day-to-day responsibilities feels to them as if they’re cutting out a part of their lives, taking their status and self-image with it.
On top of that is the same kind of angst a parent feels when the nest is about to become empty; your baby is no longer yours, and the potentially life-altering decisions are no longer coming from your reserves of wisdom and experience.
A whole generation of founders is learning to face co-dependency angst in their diminishing relationship with their firms. The issues that I’m hearing the most about, some of which are outlined here, are not so easily resolved:
After having pushed so hard for two or more decades, I feel like I’m cheating when I’m not going full force and actually want to enjoy life a little more. What kind of role will I have? Will I be a big-picture thinker, or a mentor, or will I continue in an advisory role and let client attrition gradually diminish my working hours?
What should I be paid as I transfer ownership and responsibility? Nothing? My current salary even though I’m working less? Profit distributions only?
What will I say to clients as I ease out the door? Will they regard it as success that a partner is retiring, or a betrayal because they, themselves, are still working? How do we handle unequal desire to work among the senior partners? Of course, every firm and every founder will come up with unique answers to these questions. But it might help to have a framework for thinking them through.
GIVE UP NITTY-GRITTY TASKS
Start by transitioning your role from a doer and daily grinder to something else. I believe founders can become more valuable as they exchange the nitty-gritty labor aspect of the
Founders can become more valuable as they exchange the nitty-gritty labor aspect of the job for bigger-picture guidance on the direction of the firm.
job for big-picture guidance on the longerterm direction of the firm, and look toward mentoring the talent they’ve acquired over the years.
Think to yourself: Does the firm benefit more when you work with a valuable client, or when you spend that time helping a halfdozen younger advisors become partners and rainmakers who can attract and tend to a hundred new clients each?
I also believe that unequal responsibilities at the top can be handled just as you currently handle the rest of the organizational chart. Founders and partners tend to think of themselves as equals in every way. But as they start to take on different kinds of workloads, it makes more sense to separate their equity from their diverging roles.
What does that mean in practice? Each partner should receive a partnership distribution in proportion to his or her ownership. These profit distributions do not — and should not — imply that any work on the part of the owner must be done.
After all, if we all own shares of Apple, we then feel entitled to a share of the company’s earnings. But do we also feel obligated to show up to work in the company offices?
PAYING A WINDING-DOWN PARTNER
Now let’s turn to the other element of compensation. In terms of salary, each staff member is paid according to the value they provide, right? Why shouldn’t that general formula also apply to the founding generation as they take on new roles?
The partner who checks into the office once or twice a week on the way to the golf course would receive a proportionately lower salary than the partner who is working with younger advisors and working in a hands-on capacity 40 hours a week.
The salaries can be determined in some fair and objective way, and this is also a great way to reduce the guilt factor for those founders who are cautiously testing out a new work-life balance while their partners are still engaged.
Finally, my recommendation is not to skulk out the back door as you slowly shift client responsibilities.
Instead, include clients in a glorious celebration of retirement. Planners who live a long, prosperous life and enjoy great outcomes from their own planning should naturally enjoy more credibility than those who are mired in drudgery, who never seem to achieve for themselves the same great life they are hoping to facilitate for their clients.
If the firm is retiring its principals to a great next phase of life, how much more can we believe it knows how to achieve that for the rest of us?
I suspect that these retirement celebrations, or even the disclosure that your years of planning and discipline have led to an optimal work-life balance, can actually become a marketing benefit and new source of client referrals.
WHAT ABOUT THE ANGST?
What’s the solution to the feeling that you’re no longer Mr. or Ms. Successful Firm Owner, or that the firm you’ve lovingly nurtured will be guided into an uncertain future by people whom you first met only five or 10 years ago?
Over the years, I’ve learned that the most difficult, complicated obstacles in life are those we manufacture for ourselves.
The procedural challenges to a successful retirement are much more easily resolved than the guilt that so often accompanies the letting go of status and responsibility.
Knowing that navigating the transition to retirement has been a challenge for your clients is no consolation when you arrive faceto-face with it yourself.
For the mental part, you’re on your own — but not without resources. Tell yourself what you’ve told your clients: The new life has to be planned for just as the old life was, and you have to develop different sources of joy and satisfaction.
Advisors can cure the co-dependency they’ve developed with their firms by using the same skills they use on their best days with their best clients.
The procedural challenges to a successful retirement are more easily resolved than the guilt or separation anxiety that often accompanies letting go of status and responsibility.