Is Your Practice Retirement Ready?

Retirement Readiness for Financial Advisors

Your retirement needs to be planned too


I love what I do, I’ll do it until I die…

Many of the FAs I’ve worked with over the last 40 years feel this way. It is great to love what you do, and to want to do it right to the end! However, just as you advise your clients, your legacy must be protected, and your exit planned for. 

You spend countless hours advising your clients on structuring investments, Social Security, Medicare, taxes, trusts, wills, and even lifestyle. But who is counseling you? Have you ensured that your affairs are in order – not just your personal affairs but your business affairs as well? When you run a successful practice you also must prepare your business for your retirement.  

There are 3 key areas that must be addressed: what your business is worth, who is going to continue the business and your succession plan. 


What is Your Business Worth?

This is the start. The basic formula for an Independent RIA to determine value:

2.2 x T-12 Fees + 1.1 x T-12 Commissions

In other words, 2.2 times your Trailing 12 Months Fees and 1.1 Times your Trailing 12 Month Commissions. If you generated $500k in fees and $500k in commissions, that’s 2.2x 500,000 + 1.1 x 500,000 = 1.6 Million in value. 

In looking at this valuation it is easy to see why it is more beneficial to your long-term success to transfer over to a fee-based only practice. In this example being fee-based would have brought your practice’s value to $2.2 Million.  

If you have not yet transitioned to a fee-based practice you may be interested in the Transition to a Fee-Based Advisor Guide in the downloads below. 

According to “The State of Retail Wealth Management,” a McKinsey/PriceMetrix study, fee-based revenue as of 2017 was 63% with only 46% of accounts being fee-based.


Vital Factors To Enhance Value

There are many strategies to enhance the value of your practice. I will share 3 here today. 

  1. Client Retention Strategy: Developing a rock-solid relationship with your clients will ensure that they will stick with you through a transition.  Bill Good Marketing specializes in this area and has a proven Client Retention Formula.
  2. Practice Retention Strategy: Your team is an integral part of your business as they are part of the relationship you have built with your clients. To the extent you have the right people in the right seats on the right bus going in the right direction, you have an enormous leg-up already in client retention.  If you don’t have this, you have a lot of work to do to make your business as valuable as possible.
  3. A Developed Financial Advisor Brand:  Staging your office in a way that shares details about your life, family, hobbies, charities and community involvement communicates that you are part of the community you are serving. This will help to reinforce your relationships with your clients and make fostering relationships with referrals even easier. 


Your Succession Plan

When you are read to retire, will you be passing your business on to a family member? Will it go to an outside buyer? Or will you neglect to plan, leave it to chance, and lose much of its value in a fire sale?

Family Member Transitions

Many advisors pass their business on to family, such as a Father-to-Son, Mother-to-Son, Uncle-to-Nephew and so on.  If you’ve been in business for two decades or more your income is somewhere between $200,000 and $700,000, considered to be in the top 1%.

The success of your family business transition largely depends on a few key factors such as how you integrated the family member into your business from the beginning, how you have trained them, and how aware they are of your business practices and clients.

For additional information on the best way to bring on a Junior Advisor see my Senior Junior Partnerships brief below.  

Selling to An Outside Buyer

Whether the buyer is a large firm or another RIA / FA who is looking to grow their practice, selling your practice may be your best option. There are several challenges to overcome, but it can work. The closer the buyer aligns with your values, business practices, and philosophy the more likely it is to succeed. 

Whether you decide to sell to an outside buyer or a family member, the biggest factor in success is through a process and for it to be a transition. Since people resist change, to make it as smooth and as gradual as possible will ease them into the change. This will keep your clients and staff comfortable, happy and more likely to stay with the new advisor. You and your buyer both must accept that you are selling clients with assets, not just assets. 

It’s Your Business – You Get To Decide

There will come a time when you are ready to move on or take a less active role in the day-to-day operations of your practice. Whether you transition across a year or two before you officially step into the next phase of your life, or you stick around as a consultant to your own business for a few years, it is totally up to you. However, it will all go so much more smoothly if you have planned it out well before it is put it in place.




IconHow to Transition to a Fee Based Advisor

IconStaging The Office White Paper

IconSenior Junior Partnerships

The objective for a successful “Financial Advisor Retirement Readiness” plan is for your practice to continue to be successful even after you are no longer a part of it.  Is your practice ready for transition?


Bill Good Marketing System User You

How much of my client’s money am I managing?

75-95% ?

Do I have a succession plan in place?

Yes ?

How often are my clients hearing from me?

2-3 times per quarter ?

Is my office staged to foster my client relationship?

Yes ?


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