Becoming an emeritus adviser

A different kind of role — but one that provides a more graceful transition

Jul 14, 2013 @ 12:01 am

By Joni Youngwirth

It's not uncommon for people approaching retirement to wonder, “Without my profession, who am I?” Like professionals in other fields, advisers often derive a great deal of self-worth from their work and their ability to help people.

Unfortunately, their dedication to work may cause them to delay making plans for their clients' futures. In the worst-case scenario, an adviser simply might stay in the business too long, potentially putting clients or the firm at risk.

For years, Mitch Anthony has been challenging advisers to reposition how they help clients retire. In his book “The New Retirementality” (Dearborn Trade Publishing, 2001), he writes, “Retirement is an unnatural condition. Even if you can afford to retire, the worst thing you can do is withdraw.”

Doesn't the same concept apply to advisers? Is it possible for advisers nearing retirement to balance the need to plan for clients' futures with the desire to continue contributing to the firm?

LEARN FROM HIGHER EDUCATION

Perhaps there is something advisers can learn from those in the university setting, where emeritus is the final career step for professors.

Of course, there's a great deal of variation from one institution to another in what the term actually means. In some settings, emeritus may just be a title; in others, the title might come with scaled-down responsibilities, allowing the professor to continue contributing but with much greater flexibility.

Such variations aside, one commonality is that emeritus is a term of respect for professionals in the later stages of life and career. The title isn't given automatically — typically, it's reserved for those who have gone above and beyond simply putting in their time.

ESTEEMED ROLE

An emeritus adviser could play any number of roles in a firm. One idea is to serve as a mentor to junior advisers. At the same time that one generation is leaving or getting ready to leave the industry, a new generation needs to be trained. Actively producing advisers often have little time to commit to mentoring a junior, despite mentoring's critical role in building a firm.

What would happen if an emeritus adviser and a junior adviser had joint responsibility for a small book of clients — for instance, 20% of the emeritus adviser's original book of clients (the rest having been sold or dispersed to other advisers in the firm)? Ultimately, the goal would be for the junior planner to assume full responsibility for the clients. Given the time commitment that mentoring requires — it can take up to five years or more — an emeritus adviser may be in an ideal position to assume the mentor role.

Meanwhile, mentoring offers the seasoned planner the opportunity to make a contribution to the firm in a way that can be both fulfilling and flexible.

In such a scenario, numerous questions certainly need to be addressed. For example, if the junior is acquiring the book of clients from the elder, most revenue likely will go to the emeritus adviser, even though the workload increasingly shifts to the junior as he or she gains experience, competence and skill. How, then, will the junior be compensated? A stipendlike salary might be a solution, reflecting the firm's investment in having a fully trained adviser within a certain number of years. But that is just one of many options.

What other value-added projects might an emeritus adviser pursue? Heading up marketing and special-projects efforts or organizing charitable contributions on behalf of the firm are two other examples.

As with academic institutions, the emeritus status may simply entitle the bearer to office space and limited support, such as use of firm letterhead, along with involvement in firm events. That alone may be sufficient for some advisers who simply want a familiar place to go. Of course, compliance and regulatory issues typically mandate what advisers can and can't do, as well as what they must do to retain registration.

WINDING DOWN

When considering such an arrangement, it's important both for the firm and the emeritus adviser to keep a couple of suppositions in mind. Although the emeritus adviser's career is winding down, he or she can and should expect respect from others in the firm. On the other hand, the emeritus adviser must remember that he or she is no longer in a position of power over the operational or strategic direction of the firm.

If they are reassured that they'll continue to have a role and an identity at the firm, reluctant advisers may be more open to an emeritus role and move forward with preparing for succession. In many instances, it could be a win-win-win, offering benefits for the retiring adviser, the firm and the clients.

Joni Youngwirth is managing principal of practice management at Commonwealth Financial Network.

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