With your practice revenues down and your workload--from increased client contact and possibly a few new clients--up, I realize that reviewing your own financial plan probably isn't high on your priority list right now. But it should be. My advice to my clients and to you is to take a page out of Nike's book and "just do it."
With practice revenues down, chances are your own pension/SEP/KEOGH/IRA/401(k)/Cayman account is going to be, or is already, underfunded. And if selling your practice was part of your retirement funding, it's probably worth less than you projected, too. So you just have to bite the bullet, and do for yourself what you're doing or will be doing with many of your clients: Considering your options and coming up with a new plan.
Here are some things you should consider, especially if you were planning to retire in the next five years or so:
- First on the list, of course, is your "number." We don't know how long this soon-to-be-recession is going to last, but if your retirement savings are lower than expected for a year or two, how will that affect your retirement income, and are you and your significant other willing to accept a correspondingly less lavish lifestyle?
- If you're not, then the first solution would be to lengthen your time horizon. For some advisors I know, the prospect of working longer is more of a blessing than a problem. They were going to have to be dragged out of the office when the time came, anyway. Now they have a hard-to-argue-with excuse for their spouse as to why they have to keep going to the office for another couple of years.
- The other option would be for advisors to simply work harder now. As they've approached retirement age, some advisors have been content to let their practices coast along at the same revenue level, and even cut back their working hours a bit. Now, faced with the prospect of having to work longer, they can opt to get back into growth mode, increasing practice revenues and value to get their financial plan back on track.
- Finally, consider reviewing your own financial plan as an excellent way to connect with your clients. There's no better way to motive them to reassess their financial situations than the words: "Well, I just reviewed my own financial plan and..."