Consider this: You’re a long-tenured, top advisor at the same firm for most of your career, and you’re looking to work another five years or so. Some initial introspection is telling you that where you are now may not be where you want to be when you retire. The freedom, flexibility and support you had hoped for at this stage just isn’t there, and you worry that leaving the client relationships you have spent a lifetime building just isn’t quite right. Yet you wonder if a move so close to retirement might not be ideal—causing far more disruption than it’s worth.
The notion of changing firms late in your career brings up many questions, not just related to the advisor’s own financial future, but also to your clients and legacy:
Where will my clients be best off?
Where will I be able to take things to the next level with the greatest ease, efficiency and support?
Where will my next gen partners and legacy thrive?
And ultimately, where can I best monetize my own future?
Many advisors who have spent a lifetime at their firm are asking these very same questions. With a sunset plan at around 150 percent of current annual production waiting for them, it seems suspect that, at this stage of their career, they can reap a greater financial reward.
But while changing firms may lead to enhanced client service, support and growth, it could also allow them to monetize their business twice—yet move only once.
Take Steve, a long-tenured, successful wirehouse advisor, managing just under $400 million in assets and annual production of about $3 million. He had long been loyal to his firm, and his 25-year anniversary was celebrated with genuine pride.
But today, it’s a different story. He has become frustrated by compensation changes and diminishing sales support, and, overall, he has less control over the direction of his business. When it comes to considering a successor, the junior advisor on his team is good at managing relationships with existing clients but admittedly weak at prospecting for new business.
Thinking about what is likely to be the final decade of his career, Steve started exploring his options. He had no interest in going independent, so he began to entertain opportunities at other wirehouses and found that the grass could be greener on the other side. The new firm promised him resources to support his succession plans and his clients’ needs. The firm would also deliver a real monetary bonus that would exceed his own firm’s sunset deal.
If Steve stays put, he will be able to take the sunset plan in a few years and walk away with a 150 percent payout. But this path doesn’t resolve the other gaps in his plan: the identification of an appropriate next generation successor, access to better support, and more flexibility to service clients as he sees fit. Steve’s exploration shows that he could change jerseys, solve the business issues he identified, and take the transition package that the new firm was offering. That package would total more than 330 percent over the next five years, plus another 150 percent of his trailing 12 months production through the sunset deal—adding up to a total payout in the neighborhood of 500 percent.
While the idea of moving once and monetizing twice is a sound strategy for some, no one would advocate making such a monumental move simply for personal financial gain. If, however, a move could solve for the things that your own firm lacks, then it could be a smart decision.
Few careers offer options to monetize a business more than once. Financial advisors who have worked to build a successful business have a wide array of choices that can benefit their own future, as well as that of their clients. Defining the options, trusting your own thought process and taking the time to weigh all of the potential solutions can result in a decision that allows you to live out the rest of your best business life—with an extra monetary gain you may never have imagined.