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Retirement Planning > Retirement Investing

There Is No Tenure for Advisors

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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.

Unaddressed, these scenarios can undermine your firm’s productivity and profitability. Equally important, it can damage an organization’s very precious and carefully nourished culture.

What to Do?

You certainly can ignore it. Perhaps your organization has not yet encountered productivity changes. And you may not want to create a problem where none exists. After all, you have plenty of other business issues to take up your time and attention. Or, if the situation does arise with one of your long-term and loyal associates, maybe you just want to chill out and live with it.

That may be a shortsighted solution, however. No matter what the situation, performance counts. There is no tenure in business. Sooner or later, letting performance issues slide, whether they be qualitative or quantitative, takes a toll on an individual or on the organization as a whole. Conventional wisdom says that if you get a check, you should deliver the goods.

Here are a couple of proactive approaches you can implement in your firm:

Plan for it. Make the topic of retirement planning an approachable subject in your culture. Discuss in advance how the firm can support an employee’s desire for a reduced schedule, for instance. Performance is critical. An organization depends on everyone to fulfill certain roles, complete certain tasks, and accomplish certain deliverables. It’s all about the results. But if results can be delivered by an individual and still support that individual’s emerging desires, why not?

Confront it. If this is already an issue for you, address it. Now, this is the tricky part. What do you say to a colleague who has started to drift to the extent that you feel like you are carrying him or her? Using the DESQ approach (see “Getting to the Point” sidebar) can help you get over that uncomfortable confrontation.

Once you’ve broken the ice, you can create a solution that works for all parties such as:

- Modified schedule: Consider if something less than full-time is appropriate. If full-time typically has involved 60 hours of work weekly, perhaps a 40-hour workweek is acceptable.

- Modified responsibilities: Maybe an employee’s job description should be changed. Perhaps an advisor should move to emeritus status.

- Modified compensation or equity: Consider if part of the responsibility is simply to physically be present. Uncover what happens to the highly efficient individual who contributes toward the bottom line at par with everyone else, but just isn’t available the way others are.

A wise move is to develop a plan with defined goals and expectations and measure against it so everyone knows exactly what is expected and exactly how things are changing. Be sure to put the agreement in writing. If the thought of having a conversation like the one above is too overwhelming, consider hiring a third party as a facilitator.

The Rules of Engagement

Despite the challenge of starting the conversation, most people ultimately find airing difficult issues energizing. For the individual looking to make a change, creating a goal enables that person to demonstrate that he or she will continue to deliver the results expected and consequently contribute to productivity and profitability.

With more boomers choosing to keep their hands in the industry by slowing down instead of retiring, they best be clear on the rules of engagement. Proactively thinking about the guidelines helps tenured individuals, as well as rest of the organization, anticipate how to ensure a healthy, continued work scenario for all.

Joni Youngwirth i s managing principal of practice management at Commonwealth Financial Network in Waltham, Massachusetts. She can be reached at [email protected].


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