Here's an alternative retirement strategy for advisors: Don't.

Most advisors who seek to sell their firms won't get the price they're after -- and don't even really want to sell, say the authors of a new study on succession planning.

Their conclusion: For many advisors, the best strategy for their later years might be to slow down, rather than retire outright.

"I think advisors have to look at alternatives beyond selling their practice," says Todd Clarke, CEO of CLS Investments, the Omaha-based third-party money manager that conducted the study. "Most [advisors] don't want to sell, quite honestly. They love doing what they are doing."

There's another reason advisors may not want to sell: They can't afford to.

Only 11% of the 117 advisors surveyed said they could retire comfortably, the CLS report found. While 61% said they needed at least $1.5 million to retire, and 42% said they needed at least $2 million, almost half of the respondents said they were less than halfway there.

The average sale price for a practice is about $500,000, Clarke says. With average annual advisor incomes in the $160,000 range, most advisors are going to be much better off over the long run by delaying retirement as long as possible, he says.

CLS partners with advisory firms to help them through these transitions, he says.


Clarke comes to the issue with a good deal of personal history. His own father founded CLS in the 1970s. Clarke joined the firm in the early 1990s and helped his father grow it to a 600-employee enterprise.

"Hey dad, when are you going to retire?" Clarke recalls asking his father. "He'd kind of laugh and say, 'I am retired.' He said, 'Retirement is doing what I want when I want.' … He didn't want to ever sell the business. It was his identity."

Luckily the elder Clarke did put a succession plan in place, albeit one Clarke wishes the company wasn't forced to use; his father was killed in a plane crash in 2012.

"That's why this concept of continuity plans and succession planning is so important to me," Todd Clarke says.

While many planners seem doomed to work long into their would-be retirement years, Clarke says it helps that most are like his father and really don't want to retire. And he thinks they can make this sentiment work in their favor.


Rather than selling off a firm, Clarke suggests that advisors use alternate strategies to make their day-to-day work less burdensome.

Dave Huber, an advisor in Lincolnshire, Ill., has tried it both ways. About a decade ago, he sold his firm to a roll-up company that went under -- and, in the process, failed to keep all the promises it had made to Huber and his clients.

"It wasn't a pleasant experience," Huber says, "but it probably was, in the long run, worthwhile, because it changed my thought process on the whole succession thing. I'm at the point where I'd rather do an internal transaction rather than an internal one."

Since then, Huber says he has built his firm up to 16 employees, including his 28-year-old son, with a strong bench of talent. Although he is CEO, his employees report to the company's president -- who, in turn, reports to Huber.

Now, he says, he can take an extended vacation without worrying that he will have to work straight through it. Since the end of last year, he says, he and his wife have visited their vacation home in Cabo San Lucas, Mexico, six times.

Huber says he could now sell his firm, with its $800 million in assets under management, and have more than enough to retire -- but he doesn't see himself leaving the firm entirely.

"I think, ideally, I'd like to stay involved and kind of get to where I'm down to 25 top clients and that's all I'm doing, without any management responsibility," he says. "That would keep me busy enough, but also it wouldn't be that difficult to do and I could pretty much do it from anywhere."

Other advisors point out that offloading responsibilities can help a planner enjoy staying in business well past retirement age. Former Olympia, Wash., planner Nancy Nelson says that if she had brought on more help and prepped her practice for sale earlier, she might not have burned out and decided to sell.

"If I'd done these things before, I might have just kept working," she told planners at NAPFA's annual conference in May -- "because they made it more enjoyable to be there."
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