The dark side of becoming an RIA owner

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Since I started writing this column four years ago, I’ve been assigned to deal with the journey of a younger financial planner. While most of my columns have focused on this topic, sometimes I have discussed subjects that are often avoided.

This column is going to focus on the matter of depression for an RIA owner. I will tell my own story. It should be noted that I have no medical background, so if readers find that they are in a similar situation, they should consult a doctor or counselor. My hope is that some owners who are feeling emotions similar to these will be able to take action and improve their situation.
For the past nine months, my practice hasn’t grown. In fact, it has gone in reverse; my client roster has fallen into the single digits. I have spent countless hours marketing to pick up another handful of clients, only to see those who have had great success in their planning drop their ongoing services for more ad hoc reviews.

The energy needed to maintain the status quo has been immense, and last fall, two years after starting my practice, I hit a wall.

I hit a point of exhaustion, and I had no entrepreneurial drive left. For the next few months I sat in the mental darkness while trying to keep things from falling apart. I discussed with my study group some things that were going on, but didn’t explain to them the extent of what I was feeling. I often think back and wonder if, had that fog lifted after a couple of weeks, I would have been able to turn things around.

As for how I got here, I left my previous fee-only firm with a sense of excitement. Starting my own practice and having control over every aspect was something I had wanted for years. The endless list of things to do was energizing, even though it meant working long hours. But once this initial whirlwind had calmed, the process of finding clients took over, and it took more long hours to yield minimal results.

Hearing stories of other new owners achieving results I could only dream of made me think I was doing something wrong. What I came to realize over time is that no one shares their struggles and failures.

In eight years of reading industry media, I don’t recall coming across an article about how a young practice has completely failed. It’s important for advisers just starting a practice to understand that times may be hard, lonely and often without reward. Even after a number of years of toil, the chances of a practice failing are still high.

My advice to those going through this similar journey is to talk and be open about your experience. There is a high chance your fellow practitioners are going through the same experiences.

As an introvert, I crave my own space. My most creative and productive moments come when I sit in silence and let my mind wander. But working alone can also bring pain if it is coupled with a fragile mental state. Experiencing failure while having no one to turn to can amplify the negative mental chatter to deafening levels. Speaking with a spouse can help dampen this effect but can also often transfer anxious energy and make the situation worse.

I suffered in silence for too long. During my initial year of ownership, I had a mentor who was helping me adjust to being a solo entrepreneur, but I asked to terminate the relationship because I was finding it difficult to come up with positive things to discuss. I didn’t want to taint our existing relationship with my negativity.

That wasn’t the correct solution, but it brought me closer to one that has helped immensely. Bringing together a study group of fellow owners who gather to talk every week helped me gain insight into the real stories of other owners. Surprisingly, they were similar to mine, and I came to realize that every owner struggles with challenges.

The openness of the group fostered a sense of safety to discuss what was not discussable in less intimate circles. For any owner — or any planner at all — who is feeling alone, finding other professionals in a similar situation and having frank discussions can help in discovering a sense of normalcy in one’s own situation.

In looking to increase my income, I started visiting other fee-only planners in the area looking for additional planning work.

My timing seemed to be perfect for one solo practitioner I have known for years. I assisted her while she expanded her practice. As we worked together, we saw our communication styles were similar, our planning platforms were the same, our pricing was alike and our views on work-life balance were in step.

"As my circumstances change and as I find solutions that help, I will keep assessing whether I need external help."

After six months of intense discussion and planning, we attempted to merge our practices. But on the advice of external parties, my would-be partner backed away from the deal fairly abruptly at the last minute.

In reflection, what would have been a solution to my income woes, may not have been the right long-term solution to the problem. While we left on good terms, my income struggles still exist.

But even if my income problems were to be solved overnight, I am under no illusion that my depression will go away completely. Becoming a solo entrepreneur put me in a situation that amplified an underlying condition, and it will require work to manage my depression. In the meantime, I’ve found some things that are helping:

  • Daily meditation. My mind is constantly racing, even when my to-do list is light. I now try to start each business day with a period of meditation to still my mind. Calming my mind and body helps me to focus on the present and to be at peace with my situation.
  • Frequent exercise. I have found that walking for 45 to 60 minutes a day or working in the yard helps my physical symptoms and energizes my mind to move forward.
  • Talking openly. I’ve always worn my heart on my sleeve, but only talked about things that were comfortable. In discussing depression with others, especially other business owners, the control that depression can have on my mind and body is lessened. “A burden shared is a burden halved” is a phrase that is ringing very true.

I haven’t gone to therapy yet, but am not closed off to the idea. As my circumstances change and as I find solutions that help, I will keep assessing whether I need external help.

For business owners, especially solo RIA owners, who are going through a similar situation, do not stay silent. Find a business confidant, therapist or even a close friend to share your concerns with.

I’m in this situation and living it daily, so I would also be happy to share the burden. It’s time to take the issue of depression out of the shadows.

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Practice management Health maintenance and prevention RIAs Fee-based compensation Depression