Executive Summary
Financial advisors who have established and successfully built up their advisory firms over several years can often go through many stages of firm development, requiring them to hire staff and additional advisors to manage their growing clientele. When a firm becomes large enough, though, the firm owner may be compelled to consider stepping away from their long-standing work as a client-facing financial advisor into a more pronounced business leadership role to manage the growing business. Yet, for owners who have invested years into developing their skills as financial advisors working directly with clients, considering a new professional identity in a non-advisory leadership position with little client interaction can be challenging.
In our 118th episode of Kitces & Carl, Michael Kitces and client communication expert Carl Richards discuss how advisory firm owners can manage the transition from a client-facing role into a firm leadership position and how they can come to terms with their new career identity in the process.
While there are many business resources available to help advisors address the tactical perspective of making a transition into a leadership role, a fundamental challenge that advisors must also negotiate is the identity shift that tends to come with leaving a long-time position working with clients, as many wonder if they would still be considered a financial advisor if their primary function is to oversee other advisors serving their clients… and they no longer work with those clients directly themselves?
Even though it can be difficult for firm owners to imagine who they will become in their new role, the transition can become easier by understanding and defining what their new responsibilities will entail and acknowledging that, even though they may no longer be working directly with clients, they will still have a substantial impact on how their clients are served (as becoming CEO or president offers firm owners the opportunity to shape how clients are served by managing those who will be serving clients). Additionally, having a clear and detailed vision of what their new role involves (perhaps created with the support of other advisors who have navigated similar trajectories) will help advisory firm owners reconcile the change in their professional identity by connecting how their current responsibilities relate to, and perhaps will even support their new role.
Ultimately the key point is that transitioning away from a client-centric role that a firm owner has dedicated years to develop can be a challenging process, but investing time to visualize the impact and change the firm owner will make (including the responsibility of charging their staff to uphold a standard of excellent client service) can help them appreciate the new opportunities – and accept the new identity – that will come with the new role!
Authors:
***Editor's Note: Can't get enough of Kitces & Carl? Neither can we, which is why we've released it as a podcast as well! Check it out on all the usual podcast platforms, including Apple Podcasts (iTunes), Spotify, and Stitcher.
Show Notes
- Kitces & Carl Ep 117: Sustaining A Profitable Advisory Business That Allows You To Explore New Endeavors
- Financial Planning Association (FPA)
- FPA Retreat
- John Bowen (CEG Worldwide)
Kitces & Carl Podcast Transcript
Carl: Greetings, Michael Kitces. What's happening?
Michael: David Carl Richards III. DCR III.
Carl: That's exactly right. I actually had... Did you see that on Twitter? Somebody said, "Take that, Michael Ernest Kitces?"
Michael: Yes. Yeah, I appreciate that podcast listener for following our names. Now, we got to get you DCR III as a Twitter handle here as well...
Carl: I know.
Michael: ...depending on where you put the hyphen. This is like a Star Wars ID as well. There's R2-D2, then there's DCR III.
Are You Still A Financial Advisor If Your Role Is No Longer Client-Facing? [00:50]
Carl: Yeah, super good. Super good. Super good. Listen, I have had this repeated conversation over the years, particularly the last 5 years, with people who've built firms. They've grown. They've hired a bunch of advisors. They started thinking more like an entrepreneur, which, classically, the definition would be, you want to make yourself irrelevant? They…
Michael: Spend more time working on the business. Don't spend so much time working in the business. All of that.
Carl: Yeah. And if you do it right... In fact, I said this to the team a year or 2 ago. I said, "I want you to build a business and sort of pretend I'm dead." It was just a joke. It's just a joke. But if I was gone, would the business still exist? And I've had repeated conversations over the year. I can think of a number of very specific ones, and one really recent where people in there and this is... Age doesn't really matter, but it's long enough that they built this firm. So, the ones I'm thinking of are between 45 and 55 years old, 40 and 50. Let's put it 40 and 50. The firm's big enough. There's actually tension now between them continuing to do client-facing work and running the business.
Michael: Interesting. So, a little bit similar to what we talked about last episode with Stewart laying over his clients, moving out of client-facing work. But not because the advisor wants to go do something else different, just this business is getting so big, I actually need to do more businessy things. Maybe I need to be letting go of some or more, or all of my clients so I can just manage, and run, and grow, and scale the business. Stop being the CEO person.
Carl: Yeah. What I'm super curious about is that tension. Because someone needs to run the business, right? And it's been the person we're talking to right now, and we'll just call this person Jill. Jill has built this business. There's, let's just say 6 to 10 people, 6 to 20 people, right, working there. Jill still has clients and is the CEO of the business, and is starting to feel that tension. And there's 2 ways she could go. You could hire a professional CEO, and that would be an interesting conversation to talk about. But what I'd like to talk about more is, let's say Jill has decided she is the right person to run the business. She's the right person to be the CEO. She's been the CEO, she's the right person to continue to be the CEO.
Again, a whole discussion there. But what I'm super curious about is this tension. And I've heard this a bunch. Here's the quote from somebody recently, actually. "I'm only in my 40s and I'm really struggling with the idea of giving up client-facing work. Because who does that, right?" In air quotes. In their 40s, who does that? We've painted our whole identities, is around. We talked a little bit about with Stewart yesterday. Her whole identity is, "We got the clients, we brought the clients in, we serviced the clients. And now there's tension. Somebody needs to run the business. We think we're the best person for it. We've historically been doing it. We actually kind of want to do it." Jill wants to take on this challenge. She's struggling with letting go of client-facing activities. How do we talk about that?
Michael: Well, I think you hit the nail on the head out of the gate that, look, there's a whole…the tactics of how do you transition the clients and wind them down and compensate your staff? There's a bunch of stuff there, but there's a lot of industry stuff out there on how to do that. The crux of it and the problem I see crop up most often with advisors that are doing this transition, and it's versions of what you just articulated from Jill. It's not a tactics thing. It's an identity. It's an identity thing. What am I if I don't have clients? Having built my career as a financial advisor who has clients, what is that identity? And it rings particularly true for me because... So, many years ago, FPA Retreat had this tradition that they did at the beginning of every conference, where it was called circle gathering. So, everybody who was attending the conference, which back then, they would get 300 to 400 people would sit in one giant room of just picture concentric circles of chairs because you need a bunch of layers of circles just to fit 300 people in...
Carl: Circles.
Michael:... circles like onion. And then we would take a microphone, pass it around the room, and every person would stand up and say, "Hi, my name is. I'm from and the reason I'm here at Retreat is I'm thinking a lot about blank." And you would talk about, what's the thing on your mind? What's the issue you're tackling? What's the thing you're weighing? And it was hugely powerful as just literally a way to kick off what was really a very intimate conference with some super smart, amazing, really experienced advisors was you would hear someone across the room be, "I'm trying to navigate this moment because my son has come into the business and I'm not sure how to make him my partner and not my son anymore. Because we're trying to navigate family business dynamics. If anybody else in the room has dealt with bringing their child in the business and transitioning them from a parent-child relationship to a full-fudge business partner, I want to talk to you." People would put their issues like that out there, and then you'd have all these amazing conversations at the conference because you find the other people that had their issue.
And so, I remember this because I remember getting to the point in my career where I'd been doing all of this client-facing work, but I was starting to do more speaking, more writing, more of that end, and that was what was capturing my interest more so than client work. And I was starting to try to envision, what does my future look like as a professional if I let go of client relationships? And I literally went to that circle gathering for actually a few years in a row, because it literally took me years to process the identity challenge. And the question I'd asked in that circle for years was, what does it mean to be a great financial advisor if you don't manage client relationships? What does it mean to be a great doctor if you don't see patients? Because we have that, there are doctors that do research. There are doctors that administer and lead medical organizations, but they don't necessarily do patient work. We do still call them doctor, but they don't take patients.
And so, to me, at least, this was my way of processing it at the time, does that exist for us? If Jill stops taking clients and becomes the CEO of her advisory business, is Jill still a financial advisor? Do you still call her... Because if the doctor becomes the CEO of the drug company, we do still call him or her doctor. Now, granted, there's also a medical degree and a license and some other stuff that goes with that. So, not the perfect analogy, but I think it gets at the heart of the same thing of, do you have to let go of this identity that you're a financial advisor if you're not going to keep client relationships because you're doing something else that serves and grows the business? So, I've got some other thoughts. I want to start there. And I'm really curious for your reactions to that kind of identity, the transition, this idea of, can you still be a financial advisor? I'm putting that in quotes as though video watchers can see it, audio watchers can't. Can you still be a financial advisor when you're not taking clients anymore?
How External Perception Can Affect Career Identity [09:50]
Carl: That's a great story. I remember…I miss those retreats. I have a similar story.
Michael: Retreat does still exist. Unfortunately, they don't do circle gathering anymore. It is still a conference. Check it out, FPA, whatever the URL is dot com.
Carl: Yeah. I can't relate to Jill and the other, maybe 10 people who've asked this almost the exact same question of me, from the perspective of running a big business, because I never did that. But I can totally relate to the identity piece for the same reason you did. I remember when I got an offer to somebody... As it happened, 3 different people wanted to buy my advisory firm kind of at the same time. And I had told everybody no, no, no, no. And, in fact, somebody we both know well was, "Carl, my mom taught me never to turn down an offer I hadn't seen." I was, "Well, first of all, that's great advice. Second of all, your mom did not say that." But maybe...
Michael: But did you at least look at the offer or you said...?
Carl: Yeah. So, this is the point. I went home and I told my wife, Corey, I was, "I don't know what to do here. This other thing."
Michael: So, did Corey want you to look at the offer? Now I'm just fixated on the offer.
Carl: Yeah, I told her this other thing. So, in Jill's case, the other thing is running that business. In our cases, the other thing was sort of transitioning, doing a slightly adjacent business. I remember Corey said to me, "Hey, your client business is a security blanket. Maybe for you right now, it's become an anchor instead of a security blanket." Then we did look at the offer, and we actually ended up going with the firm of that person. But the idea of, what am I? Seems to be at the heart of this because in almost every conversation I've had with people and I could mention names specifically right now, that are making the same decision as Jill, "I'm going to run the business now instead of client relationships," it comes down to, "Wait, are the clients going to be okay?" "Yes, everything's in place. It's my own firm. All the clients." There's always...
Michael: You hired these people and train them, so hopefully you're confident that they will serve your clients well. If you're not, then you have a different business problem that you need to handle.
Carl: A different problem. But there is always this, "Yeah, but there's these 3 that they've been with me from the beginning." I think it's all pointing the same thing. And I remember what John Bowen said to me when I was literally wrestling with this over the course of years like you. John said to me, he said, "The greatest disappointment of your professional life is going to be when you sell your business and nobody cries but you." Because I was, "The clients are all going to cry. They're going to be so sad." And I think that's very similar. I think we hold on to that so tightly, and especially, in this case, where it's within the firm, chances are the people that are going to be servicing the clients have already met with the clients." If they haven't, you've got time to make that happen.
So, to me, it really does come down to an identity thing, and especially in this latest question, because I'm just reading this right off of a text, this idea of, it's in quotes because I'm only 40-something, and who does that? That's the fascinating piece to me. We're so linked up with that identity that that's who we are, especially those of us who've been around 10, 15, 20 years. It used to be, "Remember that?" If you weren't actively bringing in... What did they used to call us, if you were actively bringing in clients?" They had a name for that.
Michael: Producer.
Carl: Yeah, that's exactly right. Even the name, right, if you were a producer, that implies you're the only productive person in the whole place. If you were around back then, and now you're having this question, you're 45, and you're saying, "Hey." Of course, you're, "I'm going to go from a productive role to one of those people I used to make fun of that are just bloat in the business, right?" And none of that's true. Yeah, you're right. There's a million places you can learn the skills of how to do that, the tactical piece of how to do that.
How Accepting The Responsibilities Of A New Role Can Ease Transition [14:12]
Michael: Yeah. The blocking point is not the tactical piece...
Carl: The identity.
Michael:... it's the identity piece. To me, at the end of the day, I find usually what that comes down to... For almost any of us when we're going through some kind of identity transition, you don't get through it until you get clarity on the identity you want on the other side that you're comfortable with and feel good about and can embrace. Whatever that is, whatever that looks like, either you redefine it... As long as I still got my medical degree, I'm still a doctor. Even if I'm not seeing patients anymore, it's still doctor so and so. I have accepted that I am still a financial advisor, even though I don't serve clients anymore because I did the work and I have the experience and I have the degree, and look like I can still do my advisor thing if I meet a person on the street who's got money problems. I just happen to not do that much in practice. But you reconcile, I can still be a financial advisor who now spends my time doing other things in the same way the doctor can still be a doctor even though they do non-patient things. I see some that go that route. And I see others that just get comfortable with what the other version looks like. Jill, I'm the advisory firm CEO. You're CEO of Jill's Planning or whatever she calls her firm. You're the CEO of Jill's Planning that has...
Carl: You're already that thing.
Michael:... many hundreds of millions of dollars and hundreds of clients and dozens of employees. And that's a big deal. That's a big thing. Be proud of that. Be excited about that. Embrace that. That's a great thing. You can build your identity around that's different. Say, "I'm the CEO of Jill Financial Planning. I'm not Jill the financial advisor."
Carl: Let me ask you a question, Michael, because I'm super curious about your journey. Because, look, I have found there's 2 ways to get this done. One is, if I'm being pulled to the direction of being a runner, I can visualize myself as a runner and get comfortable with that idea and go through that process, or I can start running. And then what happens is as I run, I become a runner. And then once I become a runner, I go running because that's what runners do. Do you know what I mean? It's a giant circular problem, chicken and egg problem. But there's another piece here that I'm super curious if you dealt with it, it's the who does that. Because no matter what tactic you take, there's going to be some impostor syndrome piece playing into it. There's going to be the, "Wait."
Michael: Oh, yeah. Well...
Carl: So, how do you deal with that? How did you deal with that?
Michael: You'll send her thing in... I'm in my 40s. Who does that? I did that crossroads in my 30s and I got you hold of...
Carl: You just got slow.
Michael: What are you just doing, dude?
Carl: Was it like exposure therapy?
Michael: Why are you walking away from that opportunity you've got at your firm to be moving up? So, I made that transition in my 30s. But I will say, it reminds me of the conversation with clients when they're transitioning in a retirement. There's 2 types of retirement transitions. There's people who are retiring from something, and there are people who are retiring to something. And by and large, if I the people who are retiring to something, tend to do that transition a little better. The ones who are retiring from something, I'd struggle for a version of the same thing. They retire from the thing, but they don't know what they're retiring to, and then they end up in an identity crisis because they start severing what they were, "I don't do that job anymore. I don't do that thing. I don't have those relationships. I don't show up at that place, and I don't know what I do or what I am now, or I don't know what my purpose is." I've seen some clients just get very lost. I don't even know what my purpose is when they get 6, 12 months into retirement, and they've completely separated from the old thing, and they don't know what their new thing is.
And so, for better or worse, that part of the transition went okay for me, at least just for my journey, because I knew what I wanted to do. I knew what I wanted to do so badly that I was leaving a hell of an opportunity at an advisory firm. So, it's like, I've got this thing in me that I need to do something that has more bigger reach and impact than what I'm doing in our advisory firm for our several hundred fairly affluent clients that we were making a little more affluent at the time, it was a great job and wonderfully remunerative, and a great career opportunity. But for me, I feel like I was put on this earth for a different purpose. There's something else in me that I need to do and get out and own and be, and it was just bottling up inside of me too much. I was, "I just have to do." So, that was what drove me through it. But it was still, ultimately, A, I could do it because I knew what I wanted to do. And even then, I will say I just, live real-time therapy session reflecting back. It was still a long time before I reconciled all of the identity pieces. I did the thing because I felt so driven to do the thing. I couldn't not do the thing sort of identity of it be darned. And then, for a long time, it's just, "Yeah, I'm Michael, I write a blog on the internet."
How To Separate Your Career Identity From Your Personal Identity [19:42]
Carl: Listen, I really need to understand something. When you go back there for just a second, sit down on the blue couch from it, tell us a story about that, what it felt like, or who you told. Can you remember one of those moments?
Michael: Yeah, it really was effectively a version of that. I dialed down the advisory firm work and started dialing up our platform. And I teach and train financial advisors was a version of it for a while, and I actually said teach and train without any particular definition as to what the difference was between teaching and training to do both. But it felt more robust to say 2 things and not 1. I think there was a piece that, frankly, I guess if I really look back in retrospect, that probably didn't hit until I was more into my 40s and 20 years in my career that I could really just get back to, "I'm Michael. I published a blog for financial advisors on the internet". And if you're going to make whatever judgy things that some people make when you say, I write a blog, I don't really care. I don't have anything to prove to you at this point. I know the people that I help and I feel pretty good about what I do when I wake up in the morning, and I don't really care what you think about it. And I'm not here to prove anything.
And that was easy to say 20 years into my career, as we've discussed in episodes in the past. I think a lot of us, we fight a lot of that credibility challenge earlier in our careers, and then eventually, there comes a point on the other end where we feel like we've got a little less to prove, and that dynamic changes for us in our careers. But that takes a long time to get there. Early on, I still felt like I had to have something to explain what it was and what I did, and how to explain that identity, right? It's a thing, I guess, more so in the U.S. maybe than some other countries. As I'm told from some of my friends who live internationally, this whole you're defined by your career and job and what you do, that's a very U.S. thing. Most other countries don't do it. You don't meet people and introduce yourself by your job title. We do that here in the U.S. a lot, though, particularly here in the D.C. area. Everybody's like, "Where are you from? And what do you do?" Because no one's actually from D.C. You're here for government, or politics, or lobbying, or whatever it is. And then they want to know what you do because they're trying to figure out if you're on the other side of the political aisle.
So, it's particularly hard ingrained here in the D.C. area. But that whole phenomenon of my identity's defined by what I do, I think is very ingrained in us. And so, again, when you get to scenarios like Jill, what does it mean when you're not a financial, well, not a financial advisor, because leading the firm, but you're not taking clients? Are you allowed to call yourself a financial advisor when you're not leading a firm and taking clients anymore? You handled this, you did a version of this.
Carl: I haven't handled it. I still deal with it all the time. I think 2 days ago, I went home. I was, "What am I? Literally, what am I? I'm a guy who talks about things on the internet." I used to have...
Michael: No, you're also a guy who draws those things with a Sharpie. Come on.
Carl: Yeah, exactly. I draw things with a Sharpie. That helps a lot. Thank you. I feel much better. But it's funny, lately, it's been really helpful when people have asked me what I do, I explain to them, "If this was 20 years ago, if this was 30 years ago, I would have simply told you I was an author." Because the book was the way you packaged an idea and shared it. That's all I do now, is I package ideas and share them. They just don't always end up in books. Now, sometimes they're podcasts or they're other forms of knowledge products, creative and interesting workshops, whatever.
But I think the point is, what I love about, what I think you've uncovered, which I think is really helpful to Jill and all the other people who've asked this question, is I really think that, for me, the takeaway from this conversation is the idea that you're moving to something, and actually, in this case, they all know what it is, right? And to be honest, the thing you're moving to actually has a little bit more clarity. And I don't…prestige is not the right word. I don't mean that at all. It's just there is no... This isn't an external struggle, I think, to say, what do you do? Instead of saying, I'm a financial advisor, to say, I'm the CEO of a financial firm. I don't think that's an external problem anymore. That has every bit.
Michael: You should do okay in social circles in most worlds with that introduction.
Carl: Whatever that means. Yeah, whatever that means, which I don't love. But the point is, it's not going to cause you problems. But I love the idea of, okay, well, what if you focused on where you're going to? You've got a thing that you're becoming. In Jill's case, she already is it and she's just going to be more of it. And you can structure this any way you want. And I've had long, almost coaching conversations with people about this where it's been cold turkey, I'm just going to do this. And I've had other people who have taken literally 24 months. I'm going to get rid of 3 clients a month for 24 months and then I'm going to be done. You can structure that any way you want, but you've got a clear location you're headed to. And I think that's really beautiful and helpful.
Michael: Yeah. So, think about what the new thing is going to be, and it gets easier to let go of the old one.
Carl: Totally. I think we could leave it there, my friend. Thanks, Michael.
Michael: Thank you, Carl. I appreciate it.
Carl: Cheers.
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