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Staying on top and planning your end game

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Advisers at the peak of the careers have a lot to think about. Top considerations include: Keeping key relationships happy; Building new relationships with the next generation who will inherit the wealth of the baby boomers; Protecting and keeping clients informed and happy with their financial plans; and, of course, staying on top of each and every compliance requirement.

As advisers gain experience and build their books and become more successful, perhaps the most important skill they must master is time management. Everyone wants your time – clients, compliance, administrative staff, your manager and bank personnel.

Most successful FAs will talk about a “laser-like focus” when it comes to getting things done. When they started out in the business, they probably spent about 75% of their time on new business development—opening new accounts and building new relationships. The other 25% was spent on everything else—from learning products, working with branch staff, and administrative tasks. But now adding new relationships may account for just 10% to 15% of their time, with the focus clearly on more high-net worth prospects and referrals from existing clients. Now, the majority of time, perhaps as much as 60%, is spent on servicing and maintaining existing relationships. If they are fortunate enough to have assistants or administrative staff, they’ve learned how to delegate, manage and empower their teams to do their own jobs in order to help the overall process.

In order to stay informed and be truly of value to their clients, top FAs spend as much time as they can learning. New products, taxation issues, risk-reduction strategies and estate planning are perennial topics where advisors can continue to learn. They do this by attending seminars, reading whatever they can and staying on top of any relevant developments that might impact their clients. They’ve also built relationships with other professionals, both inside and outside the institution, who they can tap for knowledge and information as well as appropriate referrals.

FAs at the peak of their careers understand the value of their time and know the costs focusing on less important activities. That’s why successful FAs embrace technology as a communications tool. When you’ve got a book of hundreds or even thousands of clients, it’s impossible to really provide effective service to them without using technology. From email to electronic newsletters to automated delivery of birthday cards, FAs are using technology as a critical tool to stay in contact with clients, stay in compliance, and leverage their time.

Along with all the things that need to be done to stay successful, FAs also need to plan for their future. Even if they are years from retirement, the sooner FAs start thinking about their end game, the more likely they’ll get the outcomes they want. It’s no secret that the average age of an FA is about 60, so it’s pretty clear that many of them need to start taking steps for their own eventual retirement.

There are a couple of really critical variables that FAs need to consider when planning to retire. First and foremost is ownership of their book. In many instances, there’s no question the bank owns the book. In other cases, the FA may own all or a part of it.

When advisors are looking ahead to their own retirement, the first consideration is ownership of their book. In many instances, there’s no question the bank owns the book. In other cases, the FA may own all or a part of it.

If a TPM is in the equation, it gets more complicated. They can have a say in the process, but it spans the gamut on just how much. In most situations, the TPM defers to the bank. For FAs, the number-one consideration is open communication with bank management. The sooner you discuss retirement or transition, the better for everyone. However, if an FA knows they’ll get nothing but the proverbial gold watch, and they want more, it’s best to keep plans close to the vest and perhaps speak to an attorney and make sure no FINRA rules or employment contracts are violated.

Whatever the situation, it’s imperative that there be no doubt about the ownership of this valuable asset. Independent firms, major wirehouse and even some banks are more than willing to buy that book, or perhaps offer the FA a job to bring the book over and work with a new rep to help transition the relationships. Some banks, understanding their FAs might move their books, are taking preemptive actions and will work with the FA to keep the relationships in house. These institutions typically will pay an ongoing and declining payout to the retiring FA over one to three years. There are no standard deals, so it’s really up to the FA and the bank to work out an arrangement that works for both of them and is in the best interests of the clients.

The other major consideration for an FA thinking of retirement is whether they want to just have a set end-date, or transition out by gradually reducing their hours, while their book is given to a new FA over time.

When FAs finally achieve their professional goals, they know that success – being a top producer and a respected professional – isn’t an endpoint. These FA are always thinking five years out. And it’s all about having a definite plan and then executing it. That’s what professionals do.

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