Succession Planning

The delicate art of hitting the road

Retirement can be a difficult transition, but advisers can stay involved in their business

Mar 10, 2013 @ 12:01 am

By Joni Youngwirth

In the 2002 movie “About Schmidt,” Warren Schmidt, played by Jack Nicholson, retires from an Omaha, Neb.-based insurance company.

After the retirement party, his wife suddenly passes away. Schmidt struggles to adjust to his new life.

Feeling useless, he goes back to the office to help out and share his wisdom. Instead, Schmidt is surprised to find that everyone is surviving without him, and everything is under control.

For many financial advisers, retirement is a double-edged sword. It offers the flexibility of free time, but new retirees don't always know what to do with that time.

To top it off, many retirees experience retired-spouse syndrome, in which their spouses/partners aren't so thrilled to have them home full time. Indeed, stories of struggle are so commonplace that many advisers prefer to avoid retirement, or want to work part time or be involved in the business in some other way.

As baby boomers face a transition from the same firms that in many cases they have built over decades, a number of retirement modes are emerging:

The merger. In a merger, the retiring adviser typically sells the firm but keeps a small segment of clients. With someone else owning the majority or entirety of the business, the firm may change its branding to make the change in ownership clear. If the buyer is large and more sophisticated, the adviser may have to embrace new policies and procedures. On the other hand, the adviser no longer has to worry about managing the daily business.

Partial-book sale. This option lessens the adviser's workload. Because an adviser may choose to maintain his or her business name and office, the adviser will continue to be involved in managing the business. Selling a significant portion of one's book eases the adviser's transition into retirement. The buyer of the first tranche of clients often has a right of first refusal or is the designated buyer for the remainder of the book.

The indefinite transition process. In this scenario, the selling adviser works closely with the buying adviser to transfer clients. A gradual transition can take years, which can be a benefit to both the firm and to a retiree who is reluctant to retire cold turkey.

All of the above are workable options. It becomes challenging when there is no plan for transition of power, with the elder adviser wanting to remain hands-on indefinitely, collect chief-executive-level compensation and have unlimited flexibility (e.g., spending three months a year in Florida).

This situation can be hard for the rest of the firm to digest. For advisers who think that retirement is time to call the shots, reality tends to set in quickly.

Although family-owned business may be different, for most, when it is time to go, it is time to go.


Sage advice is to “get a life” before it is time to retire — long before. Being passionate about one's work can be a blessing when the career fills each day with an opportunity to do something meaningful.

But it can be a curse if retiring takes away something that had provided feelings of vitality and relevance for decades. Those who are truly passionate about their life's work should plan ahead and find a new passion, especially if their future affects others.

Advisers shouldn't forget to consider one's life partner and whether he or she is looking forward to his or her full-time presence.

It can be work to find new activities that are as fulfilling as a successful career. Like new college graduates who may need to sort through options to find their passions, pre-retirees have to do the same thing to find their next passions.

Volunteering, painting, fishing, biking, cooking, teaching, traveling, playing golf or playing piano — the list is endless. Waiting until retirement to begin the search is too late.

If “all work and no play make Jack a dull boy,” then isn't it logical to identify the “play” part of one's life before retirement?


It is OK to continue to hang around as long as the roles, transition and timing are all made clear ahead of time.

All parties can benefit when boomers of a certain age keep their hands in the business by slowing down instead of retiring. The tenured adviser gets to stay engaged mentally, while beginning to embrace the freedom of retirement, and the firm continues to enjoy the wisdom and presence of a trusted adviser.

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


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