Planning Your Exit: A Guide For Financial Advisors At Every Stage

The following is adapted from Freedom Street.

As a financial advisor, it’s easy to get caught up in the day to day—the client calls, economic indicators, and, of course, returns—and forget about the long term picture. But what you may not realize, especially early in your career, is that not keeping a future plan (or an exit strategy) in mind can cause you to lose sight of where you want to go and how to get there.

You, your business, and your personal life will suffer if you’re myopically focused on the little things. Before you know it, years have passed, and you’re no closer to planning for the unknown than the day you got into the business.  It’s ironic because our entire job is to help other people plan for their future financial wellness, yet we often don’t start thinking about plans for our career or business until it’s too late. All those people—your family, employees, partners, and of course, your clients—depend on you. If you value those people, you need a continuity plan. 

An intentional, marketable plan for your business’s future is imperative for creating your rich life today, even if your eventual departure date is decades in the future. Instead of merely reacting to major life events and curveballs, you’ll be prepared, which will set your mind at ease.

In this article, we’ll go through steps you can take to execute on those plans at every stage of your career, whether you’re a rookie, mid-career, or seasoned advisor, and you’ll learn exactly what you need to do to get it together and start executing for the future. 

The Rookie Advisor 

Rookie advisors have less than ten years of experience and are often part of a team. They’re still establishing themselves, learning the ropes, and just trying to survive. The rookie is usually working side by side with another advisor in a mentorship arrangement. Remember, the average age of the most successful advisors is approximately 62, this will help understand how a decade in a business can still be defined as a Rookie. 

They’re going through the motions, hoping they’ll be successful, and waking up every day wishing they were further along in their career. The rookie wants their clients to succeed, and they want to do everything right the first time.

What The Rookie Can Do To Plan For The Future, Now

You might think that taking inventory isn’t important at this stage. But the truth is, the rookie advisor tends to get caught up in a lot of activity and neglects to see how the future will play out. If this is you, think about the types of clients you want to service.

Zero in on them and figure out how best to work with them. Find a practice to tap into that reflects the kind of service model you need, and let others tend to daily minutiae so you can focus on client relationships. That’s what will provide true value to the future of your practice.

Find Your Niche and Your People

This is also a great time to find your niche. Increase your designations and figure out where you fit. Then position yourself throughout the coming years to methodically build value, with a goal in mind. Just like advisors who have been in the business for a while, you should look around at whom you’re working with and whom you service.

Is your market diverse? What about your team? What is that market going to be in ten or twenty years, and how will that team meet their needs?

The Midpoint Advisor

Midpoint advisors have been in business for approximately ten to twenty years and are still in acquisition mode. They’re building their business, bringing on staff, and  starting to create processes.

Midpoint advisors are thinking about where they are right now, and where they want to be for the rest of their career. Maybe they have $100 million under management, and are striving for $200 million. This advisor looks at their career as a sort of marriage, thinking I got married young and for all the right reasons, but are we growing together or apart?

They may want to strike out on their own, or join a larger firm. 

What the Midpoint Advisor Can Do Right Now

Like the rookie advisor, the midpoint advisor should also be evaluating where they stand. My recommendation is to take a step back every five years and look at where you are, and how it aligns with the person you want to be and the kind of business you want to create.

What felt like the right choice for you five years ago may be way off the mark for what you want your career to look like today, or five years from now.

If this is you, consider if you’re with the right firm. Is it a good fit? Is it servicing your ideal client base or niche? Do you connect with your team or is it time to move on?

This is the time to think about your choices. If you don’t, you’ll continue on the same path for years, when you could be on a path that takes better advantage of your passions and your skills and is more fulfilling to you professionally and personally.

Avoid the Comfort Trap

If you’ve been with a company for a certain amount of time, comfort sets in, along with a fear of change. This fear makes it hard to leave, even to move on to something better. But true wealth—and true happiness—comes from the stupid decisions that you didn’t make, not the decisions that you did. The decisions you neglect to make, like moving to another firm that might fit you better, can cost you big in the future.

The Seasoned Advisor

The seasoned advisor typically has twenty years or longer in business. They’ve enjoyed upturns and survived downturns, and have had a certain amount of success. They have a good staff and solid processes in place, and are thinking about a continuity plan. Merger, or succession?

They’re not ready to retire, but are thinking ahead to the day they’ll want that.

What the Seasoned Advisor Can Do Right Now

A seasoned advisor needs to know what their practice is worth. If this is you, you should not only have a valuation, but also evaluate internal systems. Are they streamlined? Repeatable? Do most tasks rely on the advisor being involved, or are there activities that his staff handles on a regular basis? What about when you go on vacation? Is there someone in place to cover?

You should also look beyond just having a good staff to having a diverse staff. At one time, your staff may have reflected the marketplace, but times (and the marketplace) have changed.

Diversifying For The Future

Your existing client base may be getting older, but your new clients are younger. They’re racially diverse, and there are a lot of women looking for a great advisor. Does your business reflect this growing market? Does your staff understand the needs of this diverse customer base? Are you delivering service based on what your business was, or who it is now?

Time Flies, So Make a Plan

Where are you in your career, and how can you take steps to make a plan for the future, now? While your business is different from mine, I’ve known people at every age and every stage of their careers, and I’ve gleaned this knowledge from working with them.  

The longer you’re in the business, the faster time flies. Don’t wait until you’re ready to retire to look back on your career and think, “What could I have done differently, or better?” Ask yourself those questions now, and you will create major moments in minor times.

For more advice on planning for your future at every stage of your career, you can find Freedom Street on Amazon.

Scott Danner is the CEO of Freedom Street Partners, a practice that supports financial advisors in their next career step and helps them explore all available paths to secure a fulfilling future. After fifteen years practicing on an employee platform, Scott founded Freedom Street and took it from $0 to $2 billion in assets under management in just five years. Scott is the co-founder of the Chesapeake Virginia Wine Festival and enjoys traveling the country with his wife to watch their two sons play soccer.