As a new year approaches, let’s take the opportunity to look ahead and assess one of the more painful traumas advisors face in their careers – retirement.

I think it’s safe to say that when most successful advisors started growing their businesses, they had no idea they were creating something that would be so demanding of their time and energy. But as they grew accustomed to the long hours and never-ending mindshare, they probably didn’t realize how messy things would become toward the end of this long process. The thought of scaling back and giving up day-to-day responsibilities feels as if they’re cutting out a part of their lives, taking their status and self-image with it. On top of that is the same kind of angst that a parent feels when the nest is about to become empty; your baby is no longer yours any more, and the potentially life-altering decisions are no longer coming from your reserves of wisdom and experience.

A whole generation of founders is learning to face co-dependency angst in their diminishing relationship with their firms. The issues that I’m hearing, some of which are outlined here, are not easily resolved:

· After having pushed so hard for two or more decades, I feel like I’m cheating when I’m not going full force and actually want to enjoy life a little.
· What kind of role will I have? Will I be a big-picture thinker, or a mentor, or continue in an advisory role and let client attrition gradually diminish my working hours?
· What should I be paid as I transfer ownership and responsibility? Nothing? My current salary even though I’m working less? Profit distributions only?
· What will I say to clients as I ease out the door? Will they regard it as success that a partner is retiring or a betrayal because they, themselves, are still working?
· How do we handle unequal desire to work among the senior partners?

Of course, every firm and every founder will come up with unique answers to these questions. But it might help to have a framework for thinking them through.

GIVE UP NITTY-GRITTY TASKS
Start by transitioning your role from a doer and daily grinder to something else. I believe that the founders can become more valuable to their firms as they exchange the nitty-gritty labor for big-picture guidance on the direction of the firm, and for mentoring the talent they’ve acquired over the years. Does the firm benefit more when you work with a valuable client, or when you spend that time helping a half dozen younger advisors become partners and rainmakers who can attract and tend a hundred new clients each?

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The procedural challenges to a successful retirement are more easily resolved than the guilt or separation anxiety that often accompany letting go of status and responsibility.

I also believe that unequal responsibilities at the top can be handled just like you currently handle the rest of the orgizational chart. Founders and partners tend to think of themselves as equals in every way. But as they start to take on different kinds of workloads, it makes more sense to separate their equity from their diverging roles.

What does that mean? Each partner receives a partnership distribution in proportion to his or her ownership. These profit distributions do not — and should not — imply any work on the part of the owner. After all, if we all own shares of Apple Computer, we feel entitled to a share of the company’s growth and earnings. But do we also feel obligated to show up in the company offices?

HOW TO PAY A PARTNER WHO IS WINDING DOWN
Now we turn to the other element of compensation. In terms of salary, each staff member is paid according to the value they provide, right? So why shouldn’t that general formula also apply to the founding generation as they take on new roles? The partner who checks into the office once or twice a week on the way to the golf course would receive a proportionately lower salary than the partner who is working with younger advisors and taking a hands-on decision-making role 40 hours a week. The salaries can be determined in some fair and objective way, and this is also a great way to reduce the guilt factor for those founders who are cautiously testing out a new work-life balance while their partners are still engaged.

Finally, my recommendation is not to skulk out the back door as you slowly shift client responsibilities. Instead, include clients in a glorious celebration of retirement. Planners who live a long, prosperous life, and enjoy great outcomes from their own planning, should naturally enjoy more credibility than those who are mired in drudgery, who never seem to achieve for themselves the same great life that they are hoping to facilitate for their clients.

If the firm is retiring its principals to a great next phase of life, how much more can we believe it knows how to achieve that for the rest of us? Is this not the whole point of the exercise, made visible? I suspect these retirement celebrations, or even the disclosure that your years of planning and discipline has led to an optimal work-life balance, can actually become a marketing benefit and new source of referrals.

WHAT ABOUT THE ANGST?
What’s the solution to that feeling that you’re no longer Mr. or Ms. Successful Firm Owner, or that the firm you’ve lovingly nurtured will be guided into the uncertain future by people who you only first met five or 10 years ago?

Over the years, I’ve learned that the most difficult, complicated obstacles in life are those we manufacture for ourselves. They exist in our own minds. The procedural challenges to a successful retirement are much more easily resolved than the guilt or separation anxiety that so often accompany letting go of status and responsibility. Knowing that navigating the transition to retirement has been a challenge for your clients is no consolation when you arrive face-to-face with it yourself.

For the mental part, you’re on your own — but not without resources. Tell yourself what you’ve told your clients: the new life has to be planned for just like the old life was, and that you have to develop different sources of joy and satisfaction.

Advisors can cure the co-dependency they’ve developed with their firms using the same skills that they use on their best days with their best clients.

So let’s raise a New Year’s toast to practicing what we preach.

Bob Veres

Bob Veres

Bob Veres, a Financial Planning columnist in San Diego, is publisher of Inside Information, an information service for financial advisers. Follow him on Twitter at @BobVeres.