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 FA’s I’ve worked with over the last 40 years feel this way. Which 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, taxes, Medicare, 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 retirement.  

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


What is Your Business Worth?

This is the start. The most 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 Tailing 12 Months Fees and 1.1 Times your Tailing 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-only practice. In this example being fee-only 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

According to “The State of Retail Wealth Management,” a Mackenzie/PriceMetrix study, fee-based revenue as of 2017 was 63%.  Only 46% of HH had fee accounts.


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 client management and retention and there is a very clear Client Retention Formula 
  2. Practice Retention Strategy – the team you built is an integral part of your business. 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 all communicate 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 ready to retire will you be passing your business on to a family member or an outside buyer, or in the event that you didn’t plan 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 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. 

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 can be successful. 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. 

In either case, 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 either 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 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.




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 my 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 ?