Skip navigation
businessman-looking-out-window-new-office.jpg Ezra Bailey/Stone/Getty Images

Why the Shift to a Longer-Term ‘Business Owner’ Mentality Is Driving Movement

There was a time when many advisors would never have considered a move because in the short term, there was nothing to solve for. But now they’re thinking differently.

Ten years ago, if I asked a successful advisor in the prime of their career to explain their succession plan and glide path to retirement, they likely would have looked at me like I had three heads.

“Why would I worry about that now when I have 15 years left in me? I’m crushing it, I’m growing like crazy, and I’m only focused on how to serve my clients, grow my book and earn a fair wage,” they might have said.

Sure, it’s easy to keep your head down and “ride the wave” when the going is good. But even without the catalyst of recent market turbulence, we have seen a marked shift in advisor sentiment and mindset over the past several years.

Put succinctly, it’s a shift from short-term thinking to a more long-term worldview. I call it “advisor farsightedness”—the change in advisor mentality from hyper-focus on the here and now to looking at their business in the longer-term.

Today, more advisors are asking themselves the hard (but critical) questions earlier in their careers.

Who will succeed me?
How will my business move beyond me?
Will my firm continue to be the best partner?
How can I protect and maximize the value of the business I’ve built?

This longer-term view signals a more important fact of advisor sentiment. Namely, advisors are starting to think of their business as a business instead of merely a source of income during their working years. Of equal significance, though, is what this means for advisor movement.

Advisors have changed firms at near-record levels over the past several years, and the momentum has continued this year. Many advisors are realizing that while the status quo may be good enough for the short-term, it may not be for the long-term.

This is assuredly not to suggest that all advisors should nor will make an imminent move. It simply means that advisors are, at the very least, picking their heads up and asking the pressing questions. The answers to such questions often inform their decision to stay or leave.

Take, for example, a sole practitioner wirehouse advisor in their mid-40s, averaging double-digit growth over the last three years. This advisor makes a great living, and while certainly there are things that frustrate them at their current firm, for the most part, things are good enough. Said advisor obviously has no trouble growing their book; take-home comp is robust; and their clients are largely content.

In the past, an advisor like this never would have considered a move. Why would they? In the short term, there was nothing to solve for.

But in today’s environment, this same advisor is likely forced to face some difficult realities despite, or perhaps because of, their current success. And while they have built a book of business, they haven’t really built an enterprise—and they’ll be leaving chips on the table without having a long-term plan in place.

I am not suggesting this advisor must make a move to solve for the above concerns. They may very well decide that staying put best serves them. Plus, their firm may be able to help them find a successor while providing the opportunity to take advantage of a retire-in-place program. And certainly, staying put is the path of least resistance and the least disruptive for both the clients and the advisor.

But most advisors, even those who feel well-served at their current firm, are at least curious about what their options are.

For instance, many firms have shown a real willingness to allow advisors to customize their path to retirement (regardless of how many years away that might be). Or an advisor may be able to move once and monetize twice by capitalizing on a recruiting deal upon transition and then again via their new firm’s retire-in-place program. And others may be able to find a natural buyer for the business at a new firm. They may even be able to sell equity, thus taking chips off the table before retirement.

The new long-term mindset under which advisors are operating will become more entrenched, not less. As the “seller’s market” rolls on and buyers are willing to pay top dollar for wealth management practices, there is simply too much to lose by being complacent. While the status quo may be good enough for now, it may not be in the near future—and it’s a good thing that advisors are refusing to ignore this reality.  

Jason Diamond is Vice President, Senior Consultant of Diamond Consultants—a nationally-recognized recruiting and consulting firm based in Morristown, N.J. that focuses on serving financial advisors, independent business owners and financial services firms.

Hide comments


  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.