You might remember that first line from Dylan Thomas’ most famous poem from high school English class or in the movie Interstellar. It rose up this week in a discussion about an advisor with an increasingly common challenge. One that historically might have had them “going gentle” into the good night of retirement.
As we noted in an article a few weeks ago (click here), nearly 1/3 of financial advisors are between 55-64. With the sheer volume of advisors switching broker dealers each year it makes sense that a percentage of those advisors might want to switch as well, but…
Many transition packages come with an expectation (tied to compensation) that an advisor will produce for their new broker-dealer for 7-9 years after switching. For older advisors this poses a challenge. What if they intend to retire in less than a decade? Are they stuck?
Worse yet, imagine this scenario. You are an advisor in your late 50’s/early 60’s and you’ve lost faith in your current broker dealer. They might have fumbled their response to the pandemic, or simply not kept pace with where the industry is going. Have you unwittingly tied yourself to the mast of a sinking ship?
The good news is “no,” you aren’t stuck. A move at the tail end of your career is not only possible, it may also provide significant financial benefits when done well. Combined with a succession plan and/or a sale of your practice, the potential upside is strong (even when considering any portion of your transition package that may not be realized).
Let us give you an example. Bill L. is 61 years old and has a personal goal of retiring at 65. He works with 3xEquity to anonymously secure multiple transition offers, ultimately deciding to pursue one specific BD. He accepts a transition offer with a 9 year note, one that would have him working right up until he turns 70…an increasingly common thing but not the life Bill has planned.
Sticking with his plan, at age 64 he begins the process of finding a buyer for his practice. Certain broker dealers offer resources to help advisors sell their practices to another advisor within the same BD (obviously this benefits the BD to keep the assets in-house and it also makes things easier on clients). A buyer is identified and Bill negotiates the sale.
In the span of 5 years Bill has received the financial benefits of a bonus for moving his practice to a new broker-dealer AND secured the proceeds from a sale. In effect he got paid twice for his practice when most advisors would have settled for one pay day, he wasn’t stuck with a 9-year note and happily rode off into the retirement sunset.
If you are curious to learn about how this scenario could work for you, or you are a younger advisor curious about switching broker dealers, please click here to learn more from a member of the 3xEquity team.
