10 Ideas For Mature RIAs Transitioning From Work-Life To What’s Next

Over the last several years I’ve had the great privilege of working with numerous mature RIAs who were preparing to transition from work-life to the next phase of their life. Some were retiring. Others were planning to work in a different industry or take on a new role. Some had no idea what they were going to do next. Still others envisioned an active life of volunteering, travel and leisure activities. No two people had the same vision for the next phase of their lives.

In this article, I’d like to share some ideas for approaching this phase of your life and career. I’ve learned quite a bit about how to help people facing this important and irreversible decision. Before we look at those ideas, let me briefly describe who this counsel is for. The ideas I’m about to present are primarily for people who:

• Are full-time Registered Investment Advisors.
• Are mature, usually aged 55 or older.
• Are successful in their careers, having earned a strong income for many years.
•  Have long-standing and intimate relationships with most of their clients, in some cases serving multiple generations of the same family. In fact, what happens to their clients after they are no longer serving them is often their top concern.
• Are often founders of a small to mid-size practice that may include other mature RIAs whom they’ve worked with for many years.
• Feel uncertain about what their options look like. They want to transfer their practice in an honorable way while also reaping the greatest possible financial benefit for them and their family. But they don’t want to simply sell to the highest bidder, especially if they anticipate that this move would hurt their clients.
• Have thought about this for a long time but haven’t made a formal plan for next steps. They often don’t know where to start.
• Want to go out on top, making their industry exit the best possible move of their career and a capstone of their work-life. They want to be proud of the way they handle this moment. They want to make it a continuation of the excellence and integrity that have guided the way they’ve served clients their entire career.

 My Ten Ideas

 If this sounds like you or someone you care about, here are 10 ideas that I think can really help prepare for what’s next in life:

1. Start today – don’t wait any longer.
2. If you plan to keep working—find your happy-place.
3. Envision the future you want to live.
4. Build a five-year plan.
5. Set reasonable financial expectations for practice transfer.
6. Choose your successor.
7. Segment your clients.
8. Begin client transitioning on a defined schedule.
9. Make a plan to improve client delight.
10. Make a plan to go out on top with technology.

 Start Today

A journey of a thousand miles begins with a single step. Many mature financial advisors keep saying to themselves, I’ll focus on this tomorrow, or next month or next year. But my question is this. What’s wrong with now? It is human nature to put off situations that make us uncomfortable. For every advisor I’ve worked with, this process is not really fun or easy because it represents the end of something they know and like—their career in the financial services industry— and introduces something they don’t know and might even fear—the future.

To make it really easy for you to get started now, you can use the rest of the points in this article to begin making your plan. You can do that right now, today even. How can you do this?

1. Read this entire article and consider which ideas really resonate with you.
2. Pull out a notepad or use a digital device to write down those ideas that you find insightful.
3. Under each idea you like, add three action steps that you plan to take within the next 30-60 days to get you started on this journey.

You can then show your ideas to people you care about and ask them for input. It really is that easy to get started. No matter what, you’ll have to face this. So why not start now?

If You Plan To Keep Working—Find Your Happy-Place

Not everyone who transitions to the next phase of their life actually exits the financial services industry. I’ve worked with a fair number of RIAs who want to keep working for as long as their health holds out. For some people, this means they’ll keep only a select group of clients. For others, this means they’ll only work 1 or 2 days a week or just a few hours a day. Still others plan to offer their services as a consultant on a project-basis, just to keep them in the game.

If this is something you are considering, I have an idea for you. I would imagine that there are certain things in your work-life that you really enjoy doing, things that feel nearly effortless to you. There are probably other things that you don’t enjoy doing, that feel like pushing a rock up a hill. So my advice is simple.

•  Make a list of those things you want to do and don’t want to do.
• Negotiate with your employer or business partners to only do those things you want to do.
• Put it in writing.

 I think of this as your happy-place with work.

Envision The Future You Want

One of the biggest reasons people struggle to embrace what comes after work-life is because they just can’t imagine a life without work. This demotivates them from making a five-year plan and then executing it. I have known people who say they want to retire and travel. After about six months of travel, they are working again. Why? Because they never really had a plan for the day-to-day without work. What they really did is take a six-month vacation from work. They were simply too adjusted to their routines to give them up.

I would imagine that you have a daily work routine too. Routines, in fact, are both your friend and your enemy in this process. Why do I say this? To be happy and comfortable with what comes after work-life, I believe you need to envision new routines. So let’s do that now.

Think of your average day today. I would imagine it probably breaks down into a few parts:

1. What you do before work: breakfast and coffee, feed the dog, news, exercise, out the door.
2. Work: meetings, emails, phone calls, decisions, etc.
3. What you do right after work: dinner, time with family and friends, community activity.
4. What you do before bedtime: read, watch TV, spend time with significant other, relax.
5. Bedtime: getting as much good sleep as possible.

When you look at that list above, there’s probably only one thing you’ll change in the next phase of your life: work. But the problem with this is that almost no other activity in life gives us a greater sense of purpose or a sense of identity than work. Some people cannot separate who they are from what they do.

So when you think of routines for the future, don’t just think of activities. Think of things you can do that you’ll enjoy but that also give you a sense of purpose, a mission really. To be clear, this doesn’t mean you should turn this activity into a job. It also doesn’t mean you’ll do it 8-10 hours a day. But if you don’t have something that motivates you in the middle of your day that is not work, you’ll probably start to feel aimless. 

To help you think of new routines, I recommend that you make a list of up to 10 things that you would enjoy doing and that would give you meaning. Then think of ways to insert that activity into the place work used to occupy.

Build A Five-Year Plan

A five-year plan is essential to transitioning to what’s next in life. Exiting the financial services industry is more process than event. In my experience, no two people have the exact same five-year plan. But there are similarities between the plans that can serve as a starting point for you to create your own plan. Let me give you some major milestones:

• Year 1: set a clear exit date and get an independent valuation of your book.
• Year 2: find your successor and acclimate them to how you’ve served clients.
• Year 3: segment your clients into 3 groups and introduce your successor to the first group.
• Year 4: introduce client group 2 to your successor.
• Year 5: introduce client group 3, tie up loose ends, throw a party.

Of course, this is an oversimplification of the process. You can put as many milestones and as much granular detail as you want in a five-year plan. My point is that you need a plan and it should be documented. If you don’t have a plan, it’s very easy for 5 more years to go by without any progress toward what’s next in life.

Set Reasonable Financial Expectations

For advisors who genuinely care about their clients, who’ve built a solid book of business with strong and enduring relationships, I’ve noticed a trend. They tend to value their practice more than an objective analysis indicates it is worth. This is a really tough moment for a lot of mature advisors. I’ve seen the look on some advisor’s faces as they review the numbers. It’s often a look of shock, as if to say, after all of these years of faithful service, this is all it’s worth?

I have also noticed a trend amongst those who buy practices as a business. They seem to project a certain very attractive number at the beginning of the due diligence process. This creates emotional momentum for an advisor who thinks they’re about to get a big payday. But as the due diligence proceeds, the value of their practice just keeps going down. That’s rather disheartening.

To help you avoid both of these scenarios, I think it’s important to get a disinterested, cool-minded, objective valuation of your practice as it exists today. Do this at least 5 years before you plan to exit. Why? Because there are probably a lot of steps you can take to enhance practice valuation before you ultimately exit. In fact, I believe a good valuation not only tells you what your practice is worth today, it also tells you what it could be worth if you took certain steps.

Choose Your Successor

As I stated above, one of the biggest concerns of mature RIAs who’ve built long-standing relationships with clients is what happens to those clients after they’re no longer serving them. The single best approach I’ve ever seen to this dilemma is to pick your successor. If you are currently working in a scenario where this is not possible, my first piece of advice would be to move. Find an organization who will allow you to enact what I’m about to describe.

The number one factor that will determine what happens to your clients after you are no longer serving them is the person or team who is serving them. Choosing your successor will nearly always begin with the basics:

•  Do they have appropriate education and experience?
• Have they earned certifications like a CFP or similar?
• Do they share a common philosophy about money and practice management?
• Are they of an appropriate age, such that they could serve your clients for many years?

Once those basic questions are answered, there are four additional factors to consider: 

• Expectations: what expectations have you set with clients about the outcomes they’ll realize from working with you and what kinds of expectations should your successor set?
•  Communication: how, and how often, have you communicated with clients and what do you believe your successor needs to do in this area?
• Practice disciplines: how have you served clients (for example, investment policy statements, asset allocation strategies, risk tolerance documentation) and what do you believe your successor needs to do in this area?
• Technology: what technology have you used to serve clients and to provide account access for them and how do you believe your successor should handle this?  

Almost no single person will fit the bill on day one. This is why you’ll notice, in my suggestions for the five-year plan, that you spend several years transitioning clients with your successor. As you are doing this, you can help train them in how you’ve served clients, enabling them to see first-hand your secret sauce. I would advise you not to expect, on day-one, that any advisor will be a perfect fit. I would counsel you to see this relationship as a partnership, one that will evolve and improve over time.

I would also advise you to be open to new ideas as you engage with your successor. This will likely be very true when it comes to technology. In the 25 years that I’ve been in the financial services industry, the technology tools have changed radically, and, for the most part, for the better.

 Segment Your Clients

This step is a crucial part of preparing for what’s next. I often recommend that advisors segment their clients into three groups. Some advisors choose these segments based on how long they’ve served clients. The clients they’ve served the longest are often the last group they transition to a successor. Other advisors have no real criteria for why certain clients end up in specific segments.

What is important here is that you have a process and take your time with it. It is often unsettling for clients to hear that the person they’ve trusted for many years will no longer be looking after their money. They need time to adjust too. My recommendation is that you make this a multi-year process.

 Begin Client Transitioning On A Defined Schedule

This is where the rubber meets the road. Clients will either feel comfortable with your successor and possibly even anticipate great things to come, or they might feel very hesitant and view this as an opportunity to interview other potential advisors. To help you realize the best possible outcome, here are some ideas for how to introduce your successor.

1. I recommend that you do this in-person, with the client, if possible.
2. Set expectations with the client before this meeting about what you’ll discuss so they’re not surprised.
3. Begin this meeting by re-capping the client experience you’ve delivered and why you believe it’s been valuable for the client.
4. Introduce your successor and talk about values and alignment. Let the client know that there will definitely be continuity of service and relationship.
5. Give your successor the floor and let them tell their personal story. If they haven’t done this before, I recommend that you get a coach to help them develop their story.
6. Make it clear to the client that this is not a hand-off, it’s a transition. Tell them that you’re not going anywhere soon and you’ll be available to answer any questions for at least a year.
7. Set expectations about when the successor will be taking over full-time. I recommend that you position this as a year-long event, where both of you will be available to the client.
8. When the time comes for your successor to take over completely, have a debrief meeting with the client. Ask them how they’re feeling. Ask them if they intend to stay with your successor for the long-term. Then communicate what they’ve said to your successor.

Make A Plan To Improve Client Delight

Over the years, I’ve been impressed by a class of younger financial advisors, often in their 30s and early 40s. Some of them are incredibly bright, have ideas and are willing to work hard to make them effective. This gives me great hope for the future of this industry. So I have a suggestion for mature advisors considering what’s next in life.

Listen to the younger people. Their ideas could be the key to improving client delight and helping you go out on top, looking like a champ. A moment ago, I described how to choose your successor. But you should also know that your successor is choosing you too. They probably will have ideas that you’ve not encountered before. Those ideas just might enhance client loyalty, improve the payout on your book and serve as a continuation of the commitment to excellence you’ve demonstrated your entire career.

 Make A Plan To Go Out On Top With Technology

This is an area where many mature RIAs I’ve worked with really struggle. Over the last ten years, we’ve seen nothing less than a groundswell of change with FinTech (financial technology). I feel very confident in saying that the technology you’ve used for most of you career will NOT be the technology your successor will use for most of their career.

 So as you think about your succession plan and your successor, I would encourage you to consider their attitude toward, and aptitude to adopt, new technology. I believe technology will play an even bigger role in the day-to-day activity of RIAs in the very near future.

Next Steps

In this article I’ve provided ten of my best ideas about how to help mature RIAs transition to what’s next in life. Some of these ideas require exploratory conversations to ensure you really get the benefit of the wisdom I’ve provided here. If you would like to explore some of these ideas with me, please know that my door is open. Let’s talk.

About The Author

Todd Sixt is the CEO of Strait & Sound. He is a successful and seasoned leader of financial service teams. At his core, he believes in excellence and is deeply committed to helping clients achieve complete financial independence. In an industry known for overwhelming people, Todd prefers straightforward dialogue and strategies that clients can commit to for the long haul. He knows how important financial planning is to realizing long-term goals. He also knows that most clients don’t want to become investment experts themselves but instead want to work with a financial expert who will be a partner for life.