How RIAs Can Succeed In Retirement (Hint: You Need A 10-Year Plan)

Mature RIAs who are approaching, or are a decade away from, retirement often operate on a misconception. After working with hundreds of advisors in this phase of their career, I’ve noticed something. Most RIAs don’t seem to believe it’s possible to fail in retirement. Yet, I’ve seen this happen time and time again. What do I mean by “fail” in retirement?

To me, this means that the rewarding experience you thought retirement would be actually turns out to be far less rewarding than you’d hoped. I would characterize this in one word: disappointment. This often leads to a certain restlessness on the part of the retiree that sometimes causes them to strain the very relationships, with family and friends, that should be the greatest source of joy in their golden years. I want to help you avoid this.

Five Years Before Retirement

I want to acknowledge that many RIAs only partially retire. Many who are stakeholders in practices that will outlive them continue to serve a select group of long-term clients. Others sit on advisory boards. Still others serve as consultants for specific opportunities where they can provide high-impact counsel. Some will exit the industry and never look back.

So let me put forward this definition of what I mean by retirement so we’re on the same page. To me, retirement means that most of your average day is spent on things other than the work you used to do five or more days per week. Given this definition, here are the activities I believe RIAs need to focus on in the five years leading up to their retirement.

First, I recommend you surround yourself with due diligence experts so you maximize your exit potential. This is especially important if you plan to transfer your practice, in whole or in part, to someone else. While there are services out there that claim they will give you top dollar on your book of business, I’ve spoken to more than one person who has been disappointed by these turn-key programs. I recommend you get advice from, at least, a lawyer, a practice valuation expert and a CPA.

Second, I recommend you gradually phase down your work schedule. In the year before your retirement, I recommend you try to work no more than 20 hours per week, if possible. I also believe you should not work at all on at least two traditional workdays per week. This will help you more readily adjust to the next phase of your life.

Third, as part of this process, I recommend you put a plan in place to transfer your clients to someone you trust. I’ve described how to do this in another article. I don’t believe it’s possible to phase down your workweek without also transferring clients. Those are closely linked.

Fourth, I recommend you pick an accountability partner to go with you on this 10-year journey. This should not be your spouse or significant other. It could be a life coach, another professional, a religious leader you trust or anyone who knows you well and is willing to hold you accountable to do what you know needs to be done. There is often a huge gap between knowing what to do and actually doing it. An accountability partner will help you stay on course.

Five Years After Retirement

As I noted above, the first five years into retirement are the danger zone for dissatisfaction. I’ve seen people whose primary plan for retirement was to travel. Too often, they take a one-year “vacation,” the first year of retirement, only to miss work so much that they go back. I’ve even seen people slip into depression after retiring.

I’ve also heard of people who get too involved with family and strain relationships with their spouse (who wants them out of the house) or children (who are already very busy) and even grandchildren. You may have heard the term “gray divorce.” I often find that retirement forces couples to spend too much time together at a time in life when both people are experiencing substantial change.

To my way of thinking, success in retirement looks like this:

• You’re busy. Your mind is active, and you’re engaged in activities you enjoy.

• Your relationship with your significant other is healthy, balanced and deeply meaningful.

• You don’t worry about the future as it relates to money and long-term health care needs.

• Your body is active and as healthy as possible for your age.

• Every morning you wake up happy, looking forward to what the day holds.

Here are some suggestions for how to achieve this:

• Find two or three activities that give you a sense of purpose and that you enjoy. It would be best if at least one of these involved physical exercise, such as golf, hiking, softball or the like. Being a coach to youth sports, reading to children at a public library or even volunteering for a charity are all examples of activities I’ve seen people really enjoy.

• Foster relationships with a community of people you love and admire. In retirement, you’ll likely have time to do this. It would be best if these were not family members.

• Make sure you have a long-term care plan in place for the unavoidable physical decline most people experience.

The five years after retirement can be some of the best years of your life. These ideas can help make that a reality.

This article originally appeared on Forbes.


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