IA Soapbox: The Shoeless Cobbler

Investment advisors spend their professional careers planning and executing retirement strategies for their clients and their families. They use sophisticated tools and techniques to help them create intricate roadmaps for their clients to help them successfully navigate through retirement. The whole process begins years (sometimes 25 years or more) before the actual event of retirement from the work force takes place.

Isn’t it a wonder, then, that with all of the knowledge and experience that financial advisors possess in the field of retirement planning that very few firm principals are prepared to deal with their own succession or retirement in a systematic, thorough fashion?

There are many common issues, both personal and professional, that are keeping today’s advisors from properly preparing for their own retirement:

Lack of time. This seems to be one of the key issues that keep advisors from properly preparing themselves and their businesses for an eventual succession. Most principals are performing both front- and back-office duties to keep their business running, as well as trying to keep their personal lives in balance, which leaves little time for research and development of long-term succession strategies.

Lack of clear options. There are few clearly defined options for advisors looking to monetize their life’s work. Information often needs to be pieced together through a complicated series of channels and professionals so as to assess the full array of options available.

Lack of suitable human capital. There are just not enough young advisors in our businesses today to count on recruiting a successor to fill the void left by a retiring principal.

Lack of liquidity. Even if an advisor finds a suitable buyer or successor to their business, the chances of that person obtaining the necessary financing from traditional lenders is slim to none.

Believe it or not, there are some advisors that have successfully navigated these roadblocks to create and use a defined transition strategy to address their own retirement goals. A successful succession planning process will mimic the financial planning model advisors use with their clients, including:

Defining goals. This is where the whole process starts. Principals need to put effort into defining and prioritizing their personal and professional succession goals in order to develop an optimal succession strategy. Reviewing a personal financial plan should give most principals a good starting point. Start where you would with clients by asking: “How much money will you need to comfortably live in retirement?”