I spend a lot of time either working on my own practice or helping other financial advisors work on their practices. Much of this work focuses on what one can do to improve the value of their practice.
I find that increasing the value of your practice comes in two flavors. The first is what you can do to improve the value on an economic basis. The second is what you can do to increase the value on a personal basis.
Most financial service organizations or at least those run by financial advisors are either lifestyle businesses or ones that will not have a tremendous amount of economic value at the end of the day. For this reason, financial advisors should work on developing a business that can be run well into your seventies, even if your health is not 100%.
Some of the things that I believe you should think about are:
- Making your business into a niche business where you are the known expert in a particular market segment in the geographic area you work in.
- Develop a way of communicating what your niche is to all stakeholders who might be interested in what you do.
- Find a niche that you are passionate about and one that you will want to work on well past a “normal” retirement age.
- Put together a significant portion of your earnings on an annual basis in a retirement account that you can fall back on as you get older.
- Develop a business that has recurring revenue as your model. This allows you to spend more time on service and less on marketing as you get older.
- Find someone you can mentor as you age. Although you might not get a lot of money when you sell your business, it will make it easier for you to continue servicing Clients if there is someone that has been designated as your successor.
These ideas are for those of us who are not developing an ensemble financial practice. The vast majority of financial advisors believe their business is worth much more than it really is. Following the guidelines above can help in developing a business that has lasting value for your life.
I've put together a periodic table of business elements. This table has 56 ways you can strategically increase the value of a business. See which one you resonate with. To get this table, click on the button below.