By Suzanne Patrick-Lawrence
Over 40% of financial advisors will retire in the next decade. With roughly 311,305 advisors practicing in the U.S. today, this means that approximately 124,522 are gearing up for retirement in the next 10 years. (1)
When we help financial advisors transition into retirement, we see some common mistakes repeated. While we know that no one is perfect and mistakes are often made when planning for retirement, we would prefer if our advisors are aware of these common errors so that, if possible, we can help reduce stress ahead of time.
Not Having A Succession Plan
We’ve often seen how many problems can quickly unfold without having a comprehensive succession plan in place. We understand that advisors made both the emotional and financial investment into their business for many years and need a plan that clarifies what they want to do especially for their clients when they retire.
Consider asking yourself these questions before you start to outline a succession plan:
- Do you want to sell your practice?
- Do you have a buyer in mind?
- Is one of your children considering taking it over?
- Would you like to stay involved with your business in a different role during retirement?
All of these questions and more should be answered in your succession plan.
Transitioning Abruptly Without Understanding Risks
Far too often, advisors are faced with retirement before they are ready. Whether they or a loved one develop a critical illness, and no longer have the energy to run the business, or procrastinate retirement before they have developed a plan, it happens all the time.
The problem is this: Transitioning abruptly can lead to unnecessary risks to both your retirement and your business. Advisors facing this dilemma could also be asking themselves how this transition will impact their client relationships and how will it impact on their own retirement funding? If an advisor is forced to sell their practice quickly, the practice may be sold for a price that is significantly lower than what it is actually worth, which can negatively impact funding in your retirement.
Not Knowing How Much Your Practice Is Worth
This leads to my last point: not knowing your numbers. Much like financial advisors tell their clients to know their numbers going into retirement, advisors need to know how much their practice is worth so they can properly fund their retirement and sell their practice for the current market value. This is critical for financial advisors to transition into a comfortable retirement.
Thinking About Your Succession Plan? We Can Help.
At Advisor Business Solutions, we put you and your retirement needs first. We know financial advisors have spent their lives prioritizing their clients’ financial needs and retirement, but now it’s time to prepare for your own retirement. We can help you plan for what is arguably the most critical transition of your life. Take the first step and reach out to Advisor Business Solutions by emailing [email protected] or calling 562-439-4804 to learn how we can help.
Suzanne Patrick-Lawrence is the CEO of Advisor Business Solutions. She is a business planning and communications specialist with over 20 years of experience developing business and marketing strategies for financial services, global corporations, government agencies, nonprofits, and small businesses. She is passionate about working with financial advisor practices seeking guidance, support, and structure to position their firms for a successful transition. To learn more about Suzanne, connect with her on LinkedIn.