We talk to and help dozens of business owners. But there is one business we know better than any other: our own.
And there is a common theme among many financial advisors who are also business owners.
They love what they do. I mean, they really love it.
I talk to people early in their careers all the time about this. One of the interesting things about becoming good at something is that it's pretty easy to fall in love with it. You get better. People begin relying on you. Your confidence grows. Your income grows. Your reputation grows. Eventually, the business becomes part of who you are.
That's a pretty great outcome... Until it isn't.
Because at some point, loving what you do can become an excuse for avoiding the question every business owner eventually has to answer:
How does this end?
For a surprising number of advisors, the unofficial answer is what I call the BOX Strategy:
I'm going to keep doing this until they find me at my desk, not breathing, and carry me out in a box.
That's a strategy. It's just not a very good one.
Loving It and Leaving It Aren't Mutually Exclusive
I'm not suggesting you have to choose between doing the work you love and harvesting the value of your life's work. Quite the contrary.
Our experience has shown us that a long, well-thought-out, and carefully executed transition can actually open the door to new passions and new opportunities.
Some may have nothing to do with business. But many do.
You can still work with clients. You can still mentor younger advisors.
You can still walk into the office and have the confidence, identity and, yes, maybe even a little of the swagger that comes from being really good at something.
What you don't necessarily need is millions of dollars of your family's net worth tied up in a valuable, illiquid, and potentially taxable asset until the day you die.
Those are two different things.
Leaving ownership doesn't necessarily mean leaving the business. And I think too many advisors confuse the two.
I've Seen What Happens Without a Plan
Over the years, I've seen advisors get their spouses and children securities-licensed primarily to protect the value they had created if something happened to them.
Think about that for a second.
I've also watched advisors leave the business unexpectedly, with their clients and decades of hard work ultimately landing in the hands they never deliberately chose.
That's not succession planning. That's succession happening to you.
Many firms, including LPL Financial, have established important safeguards and continuity programs to protect advisors, their families, and their clients when the unexpected occurs.
Those programs matter. But an emergency plan should never be confused with an intentional transition plan.
One is designed for when something goes wrong. The other is designed to make something go right.
We're All Dying
There's an uncomfortable truth underneath all of this... We're all dying.
Hopefully not today. Hopefully not tomorrow. Hopefully not for a very long time.
But it's going to happen.
Planning around that reality isn't pessimistic. For a business owner, it's responsible.
And this is where I think the succession conversation often starts in the wrong place.
Everyone wants to talk about valuation.
What's my business worth? What's my multiple? What could I sell it for?
Those questions are important. In fact, business valuations services can vary considerably depending on what you're trying to accomplish, something I've written about before. But valuations are exciting because they finally put a number on something you've spent 20, 30 or 40 years building.
But I don't think valuation is usually the hardest part.
Acclimation is.
Getting acclimated to your options. Getting acclimated to what those options mean for you.
For your clients. For your employees. For your family. For your partners. For your finances.
And maybe most importantly, getting acclimated to the idea of who you are when you no longer own the business you've spent most of your adult life building.
That's a much harder conversation than calculating a multiple.
The 82-Year-Old Business Owner
I recently met an 82-year-old business owner who was exploring the sale of a company he had operated for more than 60 years.
Think about that. Sixty years.
His identity, relationships, wealth and life's work were all intertwined with this business.
As we talked about potential structures, do you know what was essentially off the table?
A five-year earnout.
Not because earnouts are inherently bad.
Because he was 82.
That's a reality most of us don't particularly want to face.
Five more years isn't promised to any of us. But as you get older, pretending time isn't part of the equation becomes increasingly difficult.
It reminded me of something a few of my older clients have joked about over the years.
They don't buy green bananas anymore.
Why?
Because they're not entirely convinced they'll be around when they ripen.
It's funny.
Until you realize what they're really saying.
Don't Wait Until You Stop Loving It
This may be the biggest mistake business owners make when thinking about succession.
They assume they'll know when they're ready because someday they'll stop loving the business.
Maybe.
But what if you never do?
What if you still love your clients at 70?
What if you still enjoy coming into the office at 75?
What if the business still gives you purpose at 80?
That's exactly why your succession strategy shouldn't depend upon reaching the day when you finally want out. Exit planning isn't an event. It's a process, and ideally one that begins years before an actual transaction.
You don't need to hate your business to harvest it.
In fact, the best time to begin planning may be while you still love it, while you're healthy, while the business is performing well, and while you have enough time to be selective about what comes next.
Time gives you options.
Time lets you choose the right successor instead of accepting the available successor.
Time lets your clients become comfortable with the next generation.
Time lets you structure a transaction around taxes instead of urgency.
Time lets you prepare your family.
Time lets you decide how much you want to keep working.
And time gives you the chance to discover something many successful business owners don't expect:
There may be an incredible life on the other side of ownership.
Maybe you're still advising clients.
Maybe you're mentoring.
Maybe you're investing.
Maybe you're building something else.
Maybe you're spending six months at the beach.
Maybe you're finally doing the thing you've been saying you'll do "someday."
But you get to decide.
That's the point.
The goal isn't to get you out of your business.
The goal is to make sure that when the time comes, your business doesn't get taken away from you by age, illness, circumstance or a decision someone else has to make on your behalf.
So forget the BOX Strategy.
Start with acclimation.
Understand what you built. Understand what it's worth. Understand your choices. Understand what each choice means for your clients, your family and yourself. And for many business owners, that conversation needs to include their estate plan long before the business changes hands.
Then give yourself enough time to build a future you're actually excited about.
Because after spending a lifetime creating something valuable, you should get the opportunity to enjoy the value you created.
You built the business intentionally.
You should get to leave it intentionally, too.