There Is No Tenure for Advisors

I started my career as an officer in the U.S. Air Force, where I learned a phrase that has stuck with me throughout the decades. “Eighteen in, two to go” referred to an attitude occasionally displayed by a small minority of personnel who had spent most of their first career in the military. These individuals were in “coast” mode until they put in 20 years, retired, and moved on with their lives. Of course, that attitude is not unique to the military. The concept of retiring on the job exists throughout all kinds of enterprises.

In the financial services industry, however, I’ve found most practitioners feel passion for their mission. Furthermore, independent financial advisory firms enjoy a high degree of flexibility. That flexibility allows advisors to pursue their careers into decades far beyond what our parents considered typical retirement age.

Retirement’s Changing Face

Mitch Anthony, author of The New Retirementality and other works, is among those who have been preaching for years that retirement is not what it used to be. People want to make meaningful use of their time and are inventing ways to do just that. As life expectancy increases, we are breaking the stereotypic mold of the golfing, relaxing, traveling, and socializing retiree. Haven’t we all heard stories of the 70-, 80-, or 90-year-old who comes into the office everyday and appears to be as or more productive than those half-a-century younger?

Baby boomers are moving into what for many will be the last third of their lives. They are in the unique position to define what they want to do next. Of course, we all have different needs, different passions, and are in different situations. Some people may want to keep their work status as is while others may desire time off from work and flexibility from a rigid schedule.

But while advisors deal with retirement planning daily when they consult with their clients about their financial future, they may less actively apply the concept to themselves or to their own employees. And that could create a less than ideal situation down the road.

What’s the Problem?

Because such a great percentage of the financial services population–both advisors and clients–are boomers, the issue of tenure in an organization is a potentially sensitive topic that many firms have encountered or soon will. How will those entering retirement–but who still want some form of involvement in the business–structure their time and productivity to match business goals?

Small businesses tend to have a less formal approach to management. They may not have articulated succession planning or how they view working indefinitely. At the same time, as advisors in the industry evolve from having practices to having businesses, emotions are less likely to dictate the response to this issue; it will likely be tempered with more objectivity and guidelines.

To explore the potential impact of a “working retirement” on an organization, let’s look at two examples.

In the first, assume you are an advisor working in an ensemble with three other advisors. The four of you merged practices years ago and have shared company equity for a decade, as well as compatibility and mutual respect. You are 65, and your partners are 40, 42, and 50. You enjoy excellent health and love your work. Your contributions to the firm have paralleled that of your colleagues.

But you want to start coming in later and leaving earlier. You realize that you want to spend more time with your grandchildren. The business is set up to equally split profits after it pays all individuals based on their productivity.

In a second scenario, you and your right-hand support person have worked together successfully for two decades. As she and her spouse enter traditional retirement years, she wants extended time off to travel for weeks at a time to foreign countries. You and your entire staff find yourself adjusting around her schedule. For the first year, things are fine. After all, this highly dedicated employee has given you decades of loyalty. But her extended absences are becoming increasingly problematic.

Situations like these occur every day. On the one hand, you might ask what the big deal is. Whether they are employees or advisors, these seasoned professionals have developed a track record and reputation. Why shouldn’t they work less, take it easy, or provide needed help to a family member? On the other hand, colleagues and/or coworkers may begin to resent the seasoned, successful advisor who appears to be missing in action. Or employees may resent picking up the slack for the absent team member.

If you are a solo or family-dominated firm, perhaps you won’t experience this. But as the number of ensemble firms with multiple staff increases and boomers dominate the industry, organizational behavior issues can become problematic. And it will likely be an issue not just in financial services, but–given labor force statistics and the need for boomers to continue to work–it may become an issue nationwide.