With the average age of financial advisors across the country continually rising, many industry veterans will soon decide to “take a long walk in the snow,” as one former Canadian prime minister famously put it upon announcing his retirement.
According to data compiled as part of Investment Executive‘s annual Report Card series, the average age of advisors in 2013 was 48.7. That’s an increase from an average age of 46.7 in 2009.
If you are approaching the later years of your career, says Sara Gilbert, founder of Strategist in Montreal, building equity into your practice should be a top priority.
“There aren’t a lot of young advisors coming into the business to buy books,” Gilbert says. “So, veteran advisors should do everything they can to build equity into their businesses.”
To help you achieve that goal, Gilbert proposes the following strategy:
> Understand your firm’s policy
Every dealer has its own succession policy. So, before taking any steps, find out about the rules and support systems that are in place at your firm. Your firm may specify that you own your own book of business, which can be sold to an upstart advisor. Other firms stipulate that they own the book of business, so the firm will manage the transition.
> Delegate it
Work on transforming your business so it can become self-sufficient, Gilbert says. Typically, practices that are advisor-focused and depend highly on your day-to-day initiative are harder to sell.
Develop a business structure that takes attention off of you and places more emphasis on your team. Delegate more decision-making authority regarding various segments of the business — such as research or marketing — to one or more team members. That way, you have a team with a broad base of specialized expertise.
> Build a brand
You will have much more success selling your practice if it has a strong, recognized brand.
Building your brand is a proven marketing strategy that will increase the value of your practice.
Building a brand requires a long-term strategy. Gilbert suggests these brand-building techniques: build a great website; hone your social-media presence; or offer specialized products, such as socially responsible investments, that many others do not.
“Anything that gives your practice a unique feel,” Gilbert says, “do it.”
> Start the transition early
Begin the transition process as soon as you have a successor lined up. That means introducing your successor to your clients as soon as is feasible.
“Baby boomer clients are now asking their advisors who will take care of their assets when the advisor retires,” Gilbert says. “Showing them that you have a succession plan in place will help build client loyalty.”
This step will enhance the future value of your business by helping to ensure assets will remain at the practice through the intergenerational wealth transfer. Clients will be more likely to refer the new advisor to their children.