Biggest Risks to Your Lifestyle Practice
You've built the business you've always wanted, so now it's time to sit back, relax and just enjoy the life each day. Don't put your feet up just yet. Before you get too comfortable, make sure you have a plan in place to keep your practice at the level youve achieved.
You may have a lifestyle practice on purpose, planned around family responsibilities or other interests in life. Or, you may have a lifestyle practice as a result of getting comfortable or even bored over time. Either way, the risks are the same and should be on your radar without taking away from the work-life balance you have.
The concept of a lifestyle practice is appealing and often a sign you have reached a level of success some advisors may never get to. Naturally, your business might feel like it runs itself at this stage, and you are not feeling the pressures to grow you felt early on in your career.
RISKS TO YOUR PRACTICE
The dedication you put into building a successful practice should be rewarded. While I am not telling you to sell your home, cancel your vacation plans and move into the office to work non-stop, there are risks associated with a lifestyle practice:
Competition is more intense. The industry is evolving and there are many channels for clients to pursue. Fee compression can be lurking near your bottom line.
Marketing muscles atrophy. If you've built your business with referrals only, that can be a reflection of the great service you provide, but these eventually can drop off. Your competition is likely using a multi-channel marketing approach, and the idea of slow and steady can win this race with consistency.
Selling yourself short. We've worked with many successful advisors who are just plain bored. Realizing a disconnection from your business and doing something about it can benefit you, your staff and your clients. Remaining apathetic could become contagious.
Changes in demographics. If your clients die, will their assets transfer out? Will your normal flow of new clients replace what's exiting? Being prepared as clients switch from accumulation to distribution can keep your income in line. Simple analysis now can mitigate unpleasant surprises later.
Trouble with talent. Coasting may be acceptable to you, but staff seeking to grow might leave. Being aware of their goals can be beneficial to you in many ways. You could also have people settle in to a culture of comfort, or eventually anti-change. In many cases, this staff is on the front line with your clients and is the face of your company.
Falling behind in regulatory changes. Like many other industries, change is a constant in financial planning and financial services. Awareness is essential in keeping up with the rules and regulations that protect you and clients.
WHAT TO DO
Understanding these risks, you could decide to do nothing at all. You can be comfortable, live your lifestyle and enjoy the success you've created. Of course that approach could result in your practice losing value over time.
Or, you may recognize that there needs to be change and make the necessary plans. If your mind told you to re-engage, listen to your heart for your first steps. As an advisor, your actions impact others in many ways. Here's how to get started:
- Focus on relationships with one-on-one meetings with top clients or groups of clients.
- Challenge yourself to add value, offering new services or products to your clients.
- Evaluate your team to create a clear picture of what success looks like.
It may also be that you need to court the next generation or team up to maintain or enhance service, without sacrificing your lifestyle business.
Fresh faces bring more energy. Passing along wisdom to younger professionals can provide a lot of satisfaction for you and a jolt to your business as well. Involving and rewarding others for contributing to the business can help mitigate the risk having great staff who are looking to grow and willing to leave if they don't get the opportunity to step up.
The benefits of a lifestyle practice can be very attractive. You may be reaping the rewards you were seeking when you started working so hard in this business. Time with family, for hobbies, traveling or free time just away from the office are deserved. Lower pressure to produce and perform while enjoying a business you've taken from survival to success can be great for your health and happiness.
Just make sure your end game is in alignment with the practice you're running today. Lifestyle practice or not, no matter what type of business you run, make it a purposeful one, so that you can grow, manage and exit your business on your terms.
Chris Kirby is a business consultant for Securities America's Practice Management Group and serves as a consultant/coach for the firms Business Consulting Service, helping advisors manage a more efficient, profitable and satisfying practice.