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Deciding when to retire is a very personal and difficult decision. As financial advisors, we are fortunate that most of us can choose when we retire (exit our practice) and can usually wait until we are fully prepared. However, since retirement is such an enormous change, we are naturally inclined to ignore hints of the approaching need to retire. We need to listen to ourselves and the people around us.
This is the first in a series of articles relating to retiring and succession planning for advisors. In this article I will share my reasons for exiting my practice after 33 years as well as a list of questions for advisors to ask themselves…hints that it may be time to start preparing for retirement.
I exited my practice at age 60 at career peaks in both AUM and revenue generated with a team of six. More than 6 years later, I remain confident that it was the right time for me. The more I listen to other advisors, the more I realize that we all have different priorities, interests, obligations and financial situations to consider when planning our exit. Age 60 was the right time for me but is clearly not the right time for everyone. I spoke to a 90-year-old former advisor who retired at 72. After 18 years, he remained confident that 72 was the right age for him.
Why I retired when I did
Age
As I approached age 60, I sensed the realities of aging and how short life can be. Financial advising is a demanding and stressful profession. Unfortunately, I’ve seen many advisors burn out and some die while still working. I often wondered when the individual would have retired had they known their own personal expiry date. I did not want to wait until I had health issues or suffered burnout.
Satisfied with accomplishments of my practice
I had achieved my firm’s top performance level for the last 24 years of my career and felt well respected by my clients, team members, fellow advisors and firm management.
Practise readiness
Fortunately, thanks to how I built my practice, I was very confident in the members of my team who were poised to take over my practice.
Financial preparedness
My personal financial plan indicated I could afford to retire and maintain the lifestyle I desired for myself and my family.
Time pressures
Although I loved being an advisor and working with my team and clients, I felt pressured by the demands of the business even though I had delegated much of the day-to-day duties to my team. I became frustrated with the lack of time to fully satisfy my other interests and responsibilities. I was always rushing to the next thing, rarely truly relaxing or taking time to enjoy what I was currently doing. I never seemed to have enough time for my 91-year-old mother, my teenage son, my wonderful husband, or my friends and other family members. I also wanted to spend more time doing things for myself like exercising, reading, puttering around my home, and spending time at the cottage. I wanted to stop feeling guilty when doing things solely for myself.
Desire to accomplish other goals
For years I have longed to write a book for individuals and another for advisors but did not want to take time from my family or my clients to do so. I have since published a series of 3 handbooks for financial advisors and am deep into the process of writing a book for the general public intended to improve general knowledge and show how individuals benefit from and need professional financial advice.
I was losing patience more easily
A year or so before my retirement. I was conversing with the son of a recently deceased client who was acting as power of attorney for his widowed mother. He insulted my integrity. I did not say anything inappropriate, but I did lose my temper. I can’t remember ever losing my temper like that with another client. I remember thinking, “I should have had more patience. I should not have lost my temper, and maybe I should be retiring soon!”
I remain pleased with the timing of my retirement. I have more freedom to relax and enjoy life now that I am free from the responsibility of responding to client needs. My days are no longer scheduled from start to finish, although I have developed a new routine. Retirement has allowed me to enjoy more of life’s pleasures, learn new skills and accomplish different goals.
Hints That It May Be Time for You Think about Exiting your Practice
Retirement is an enormous change, therefore, we’re naturally afraid to hear the hints that are often right in front of us. We need to listen to ourselves and the people around us. Asking yourself the following personal and business related questions will help you determine the timing best for you.
Personal Questions
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Do you feel the need to spend significantly more time with your family?
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Are you feeling that you don’t have time to explore other interests?
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Are you becoming frustrated with the lack of time for non-work-related activities?
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Are you approaching or past the conventional retirement age?
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Are you becoming envious of your retired friends’ freedom?
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Is your health is starting to suffer?
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If you were told you were sick and dying, would you wish you had retired earlier?
Business Questions
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Do you find yourself thinking that advising used to be more fun but now it is feeling more like work?
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Do you have less patience for your clients?
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Do you have less patience for your staff?
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Do you have less patience for the demands of the industry (documentation, paperwork, etc.)?
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Are you more easily offended or bothered by client comments that make you feel unappreciated?
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Are you uncomfortable with the idea of helping your clients endure another bear market
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Do you find it difficult to put in the time and effort required to keep up with the rapid changes of the industry (products, services, compliance, taxes, technology: systems, use of social media and AI, etc.)?
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Are there changes you know you should make to your practice but don’t have the energy to do so (fee structure, discretionary, use of managed money)?
If you are answering yes to a number of these questions, you may be closer to needing to retire than you have thought. I have met many advisors who woke up one morning and decided they did not want to work any more. This is after thinking for many years that they would never exit their practice. It was like a switch flipped in their mind.
If you are at or approaching traditional retirement age, I recommend that you start planning for your exit even if retirement does not appear to be imminent. This will give you the flexibility to retire in response to changing circumstances.
The next article in this series discusses how waiting too long to retire affects all of the stakeholders in an advisor’s practice.
Related: Should You Add to Your Team? Recognize the Signs Before Your Practice Plateaus