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You spend countless hours helping your clients get ready toretire.

You coach them on how to structure their investments to maintainthe lifestyle they desire.

You help them with Social Security, possibly Medicare. You mayeven offer counsel on where to live.

But what about you?

Almost every advisor I talk to has a single answer to thisquestion: “When do you plan to retire?”

“They will carry me out of here. I love what I do.”

That's all well and good, but sooner or later the inevitabledynamics of life take over. You will decide to retire, or you willhave to retire.

In this article, I will discuss some things you should bethinking about as you prepare your own retirement readiness.

As you read it, you will discover a reference to additionalresources. We have created a retirement readiness page just foryou, which iswww.billgoodmarketing.com/FA-Retirement-Readiness.

What's your business worth?

This is where you start.

There is a very rough formula in the independent/RIA sector todetermine the value of your business. The wirehouse firms each havetheir separate formulas. If you are in a wirehouse, you should alsouse this formula, just to check.

The formula is: 2.2 x T-12 fees + 1.1 x T-12 commissions.

This is not hard. It's not complex algebra.

T-12 = trailing 12 months.

Let's say you have a practice with $1 million in gross revenue;$500,000 in fees and $500,000 in commissions.

2.2 x T-12 fees = $1,100,000.

1.1 x T-12 commission = $550,000.

Rough value = $1.6 million or so.

The math obviously is easy. The implications are profound.

By converting to fees, $1.6 million becomes $2.2 million. Again,more or less.

There are challenges here. According to “The State of RetailWealth Management,” a Mackenzie/PriceMetrix study, fee-basedrevenue as of 2017 was 63%. Only 46% of households had feeaccounts. (I have posted a link to this study on our “FA RetirementReadiness” page, which provides some other interestingbenchmarks.)

We have developed a strategy to help you do this. If you are notyet 90%-plus fees and you are over a certain age, it's important toget on with it for several reasons, not the least of which is thatyou can improve the value of the company, which sooner or laterwill be passed on to a family member or sold.

Vital factors to enhance value

There are many factors. Let's concentrate on three.

1. A client retention strategy. Your objectivein preparing your own retirement is to take steps to ensure theclients remain with the practice. Your buyer or heir's objective isretaining the clients. That's what they bought. That's what you getpaid on.

On our FA Retirement Readiness page, I have posted a copy of ourjustly famous “Client Relationship Retention Formula,” one of thebest client management systems in the industry.

I would suggest that you hike over there immediately, downloadit, study it and get to work.

2. An effective team who will remain after youleave. This is vital. You may have an assistant who hasbeen with you 25 years, and when you leave, he or she will leave.Not good. As you plan for the next 25 years, you may have to builda new team around this person.

Make no mistake about it: In a properly configured financialadvisor office, primary relationship management is done by theteam. It is a total mistake to think that you, the financialadvisor, is the relationship manager. You are the financialdoctor.

To the extent you have the right people in the right seats onthe right bus going in the right direction, you have an enormousleg up already in client retention. If you don't have this, youhave a lot of work to do to make your business as valuable aspossible.

3. A office branded as a financial advisor'soffice. This may seem relatively trivial, but it isnot. In the last several weeks, I've seen photos of atleast a dozen advisors' offices. Most of them have a look I wouldonly describe as “modern clinical.” They have gray walls, a deskand two chairs, in some cases, not even a picture of their familyon the wall.

On our FA Retirement Readiness page, we have posted a vitaldocument for you, “Staging the Office.”

Your referral prospects are easy. Your client Bob tells hisbrother-in-law Billy, “Now you go talk to Jim and do what he says.Otherwise, I know you and Marge will buy a boat or somethingstupid. Here's his number. Call him.”

Billy walks into your office and says, “Bob told me to talk toyou about Marg's $400,000 inheritance. What should we do?”

Your non-referral prospects are much more difficult today thanever. Proper branding of your office is vital in selling yourservice as well as selling your practice.

Succession Planning 101

You really have only two scenarios that you can consider foryour succession plan.

Scenario 1 = Bring in a family member.

Scenario 2 = Find an outside buyer.

There is a third scenario, however, which you don't want.

Scenario 3 = Fire sale.

This happens to you when you can't or don't want to workanymore, starting tomorrow. It is not really part of a successionplan, but rather is an emergency plan.

Let's take a closer look at the two succession planscenarios.

A. Turn your business over to a family member Isee this a lot. I see father to daughter, mother to son, uncle toniece or nephew and all other possible combinations.

As a survivor of two decades or longer of hard work, your yearlyincome is most likely in the top 1%. Depending on where you live,that's somewhere between $200,000 and $700,000 a year, says theEconomic Policy Institute.

These numbers are not at all uncommon for FAs who have been inthe industry 20 years or more. (Your chosen successor may have noreasonable possibility to enjoy what you have enjoyed unless theycan step into your shoes.)

As we look at this scenario, I want to start with the two basicmistakes I see “seniors” committing.

Mistake #1 The senior tells the junior, “I wantyou to do what I did. It's important that you know you could do iton your own. So, I want you to cold call for a while, and once youhave shown that you can bring in assets, I'll make you part of thebusiness.”

This almost always fails. Why?

Things are different now than when you came into the business.Back in the '80s or '90s, it was a 99%-transaction heaven. Youcould open an account with 1,000 shares of a $10 stock. Not aproblem. You then would develop the account. That was the game.

But today, especially if you are with a national firm, you don'tget paid on accounts with less than, say, $250,000. This means your25-year-old child is supposed to sit down with affluent or wealthyprospects and convince them to give an obviously new advisor asubstantial part of their net worth.

That's very, very difficult and almost always fails.

Mistake #2 Make your junior a servicingadvisor.

This is, frankly, insidious. Your junior passes all the tests,does whatever training the firm has, and you assign him or her thebottom 10% or 20% of the book. He or she is expected to call them,develop them, find additional assets, and if nothing else, stay intouch.

I have watched countless numbers of these arrangements fail.After a couple of years, what you have is an advisor with a“servicing mentality” — not a “sales mentality.” And when thelatter sets in, it is virtually impossible to break.

If your junior servicing advisor takes over your business, he orshe has just inherited a dying business — because they don't knowhow to reach out and find someone beyond your centers of influencewho can bring in fresh assets.

Because I'm in a good mood, I'm posting a copy of my “SeniorJunior” partnership document on our FA Retirement Readinesswebsite. If this is the scenario you would like to pursue, you needto go download this, absorb it and implement it.

B. Find an outside buyer

There is certainly a movement in the industry to buy uppractices of retiring advisors. Some of these are being snapped upby large RIAs. Others are being purchased by FAs who have decidedthe best way to grow a business is to just go buy one.

You have several challenges to make this work. But make nomistake about it: It can work. Obviously, you need to find theright person. The only guidance I can give you in this regard is torely on the salesperson skills you've acquired over a businesslifetime.

You have developed a sense of people. When talking to aprospect, you may get little second-thoughts rattling around theback of your mind. You have probably learned to listen to these.And so, you don't pursue what otherwise looks like a goodprospect.

It's the same with finding the right person to take over yourbusiness. Listen to those second thoughts.

Now get a price. You can certainly use the rough formula I gaveyou, but you should get an appraisal of your business. While youcould probably go to a local CPA firm, you could also turn to anorganization like FP Transitions, for instance, to do a businessappraisal. This group also works as a broker and helps advisors buyand sell practices. So, it knows prices and can therefore providean appraised value based upon actual selling-price data.

You need a transition

Most people do not resist change as such. They do resistdramatic change.

You find a buyer. You make the announcement. You're gone.

Not a good strategy at all.

Best bet is once you finalize your deal, you must stick aroundfor a year. Again, you are selling clients with assets — not justassets. There needs to be a gradual hand-off.

But there should be a hand-off. I counsel my clients who areselling a business or buying one that the seller should, at apoint, leave and be done with it.

Go on and create version 2.0 or 3.0 of your life.

Bill Good is founder and CEO of Bill GoodMarketing. He is the author of “the” book on prospecting infinancial services, “Hot Prospects.” He created the Bill GoodMarketing System and has been named one of the industry's top fivecoaches. In partnership with Chad Henry, he developed theChad Henry Master Class, which teaches all aspects of seminarmarketing — from the invitation and presentation to the officeappointments. Learn more at www.billgoodmarketing.com or call Jill Jackson at888-495-7303.