As I’ve spent the last year and a half launching my new RIA, most of my focus has gone into building my practice, with a focus on marketing, networking and serving new clients. Yet along the way, I have also created multiple revenue streams — providing hourly online financial advice, writing and consulting; the most recent addition has been book royalties.

Most of this was out of necessity; I needed income for my family. But it has become part of my career journey.

And I’ve noticed that I’m not alone. Many of the younger advisors who I network with find themselves on similar paths: They run their own financial planning practices, but also hold a variety of other paid positions as well, working as an industry consultant, software creator or speaker, or in a variety of media roles.

All of them say their practice is their No. 1 priority; it’s that expertise that has spawned most of these other income streams.

Yet in pursuing the growth of their own firms, they’ve also heeded a broader mandate — whether leveraging their knowledge on other platforms, or pursuing other passions (and making money doing so).

NONTRADITIONAL APPROACH

This approach to a financial planning career is relatively new. Typically, younger advisors would work extraordinarily hard to start their practices, searching for clients for the first couple of years. Once they had enough assets to bill on to yield a steady income, they would hire staff, build up an asset base, continue to attract clients ... and then sell their firm at retirement.

There’s just one problem: Spending the next few decades building just one thing seems, dare I say it, boring. I also shudder at the thought of hiring a team of employees — dealing with payroll, employee handbooks, ERISA guidelines and the overall bureaucracy that goes with an expanding workforce. Does that have to be the only way to increase one’s income? What if advisors want a smaller practice that is just a part of their income-producing activity — diversifying their earnings, and allowing more flexibility in the ways they spend their time?

My current mix offers upsides and disadvantages. It provides me a lot of variety; one week can look very different than the next. But it can lead to a sense of confusion. On a day-to-day level, should I be focusing on building my planning practice, or on something else? If I focus on one stream of revenue, it may grow faster — but what if it doesn’t or if I find I no longer enjoy it?

And many peers don’t understand it. I frequently get asked, “Why would you want to work on so many things?” Another RIA owner challenged my game plan, suggesting that my consulting would distract me from the progress of my RIA — which is, after all, my main goal. I have been told many times that I should drop all other commitments and put 100% of my energy into my practice.

PERSONAL GOALS

I took those comments to heart. But upon reflection, I realized there was a bigger picture that wasn’t being taken into consideration.

One reason to grow a successful practice is to generate income to support a family and personal goals. A financial planning business can do that; so can a mixed set of revenue streams.

But money is not always an effective, intrinsic motivator. Look at highly paid salespeople who jump companies when they want a change, or actors who keep making movies even if they are millionaires many times over.

Entrepreneurs have to be happy with what they are building — whether a big company or several small enterprises. Personally, I like the challenge of juggling many smaller projects; I get bored when I have to focus my energy on a single enterprise for an extended period of time.

When I talk to some of my like-minded peers, I find there is one thing they have all done — mapped out the maximum size of their practice. As they plan what they want their careers to look like and how they want to spend their time, they have put an upper cap on the number of clients they want to serve. (In fact, one of the 20-something planners I know has already reached his cap and closed the practice to new clients.)

Budgeting time is critical. They know how long it will take to serve their clients and how much time other projects will consume; this allows them to calculate when they can pick up new projects. It takes a detailed daily (and monthly) calendar to make sure all tasks are completed without having work run over into family or personal time.

LIFESTYLE MODEL

Can this model become the norm for lifestyle-focused planners like myself? What percentage of advisors will find themselves shunning the “grow a big practice and sell it” mentality — instead aiming to grow a collection of income streams that let them work less and still afford the lives they desire? Will more move away from the traditional structure?

One example is Jeff Rose, a CFP in Carbondale, Ill. He also runs the financial blog Good Financial Cents, which has spun off a book, podcast and video series, while his wife makes money blogging about parenting. He says the couple’s combined online publishing income topped $230,000 in 2013.

“I’m a big believer in keeping my options open,” Rose tells me. “By diversifying my income streams, I have the ability to sell one of my businesses if I ever wanted to, so I could focus on the ones that I was really passionate about.”

We tell clients to diversify their investments, and Rose believes his portfolio of work will help him weather a stock market decline with minimal impact to his income. Meanwhile, his publishing does double duty: “My online [activities] bring in a nice monthly income and they also act as a referral source for my practice.”

GENERATIONAL SHIFT

My thought is that Gen Y entrepreneurial advisors will start to gravitate toward this different model, something that my conversations prove is already happening.

Even recruiters are remarking on this trend; they watch Gen Y employees start climbing the corporate ladder only to scale back a career to find additional work that is more fulfilling.

How could this affect the future of our profession? While at one end of the spectrum, mega-RIAs will continue to grow through acquisitions, you may see more small “lifestyle practices” as well. Clients may want to work with planners who keep their roster small and offer high-touch planning to a few dozen families. In addition to serving those clients, these advisors may spend their spare time working on other income-producing projects.

Planners who are confident in technology and outsourcing could run a practice of this size in half the time. By outsourcing phone responsibilities to a virtual (but live) receptionist, financial planning to a virtual paraplanner, investment management to a TAMP, digital presence to an online marketing firm, the planner could work as a little as one day or two days a week serving clients — getting to know them better, and understanding how they want to handle their money.

By bringing all the outsourced services together, a planner can offer a customized plan to the client with greater efficiency.

We often tell our clients that they need to create margin in their lives so that they can enjoy it more. By creating a career with great flexibility, I can take care of my goals and my family needs in much the same way that I encourage my clients to do.FP

Dave Grant, a Financial Planning columnist, is founder of Finance for Teachers, a planning firm, and Fee Only Consulting, in Cary, Ill. He is also the founder of NAPFA Genesis, a networking group for young, fee-only planners. Follow him on Twitter at @davegrant82.

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