8 Business Traps for Advisors & How to Avoid Them: Kitces, Richards

Given that financial advisors can spend decades developing client relationships and building their practice, it can be challenging for them to transition to a lifestyle where their main focus is no longer on working with their clients.

Complicating matters is the fact that next-generation financial advisors often hope to earn themselves an equity stake in an established firm and to position themselves to be the natural successor of an elder advisor’s book.

When these aspirations are delayed or blocked by senior advisory firm partners who choose to delay their own retirement plans, it can leave younger advisors frustrated and in a place of uncertainty about their futures with their firms.

Such dynamics can cause significant strain within a firm’s culture and result in poor outcomes for both current and future firm leaders — with the very real potential for intrafirm disagreements to interfere with excellent client service.

This dynamic is explored in the most recent episode of the Kitces & Carl podcast, hosted by Buckingham Strategic Wealth’s Michael Kitces and client communications expert Carl Richards.

During the episode, Kitces and Richards discuss how frank conversations between younger advisors and firm owners about succession plans and career-track expectations can mitigate the repercussions of retiring advisors who may reconsider their original plans to retire or scale back from firm activities.

According to the duo, as a starting point, it is important for younger advisors to acknowledge that their senior peers’ professional success and lifelong career experiences have become an integral part of their personal identities.

At the same time, it is also important for firm owners to understand the frustration a rising financial advisor may experience when their own goals and career aspirations are sidetracked by unexpected delays in the retirement plans of senior advisors and partners.

See the slideshow for a rundown of Kitces’ and Richards’ top tips and strategies for facilitating smooth leadership transitions that meet the needs of both generations involved. Getting this work right, the pair argue, can help a firm both secure and grow its enterprise value, while helping its professionals lead fulfilling and balanced working lives.