The Advisor Dilemma:

Take the Sunset Package or Sell the Business?

The Advisor Dilemma:
Take the Sunset Package or Sell the Business?

   21st May 2023 by Gareth

   21st May 2023 by Gareth

A sunset program for retiring advisors is a structured initiative implemented by firms to facilitate the transition of advisors into retirement. It is designed to provide a gradual exit strategy, allowing advisors to reduce their workload and responsibilities over a defined period of time. The program typically includes elements such as mentoring, knowledge transfer, and succession planning. Firms offer sunset programs to their advisors for several reasons.

Firstly, these programs help firms retain valuable expertise within their organization, even as advisors approach retirement age. By allowing advisors to gradually step back from their full workload, firms can tap into their knowledge and experience while also ensuring a smooth transition for clients. It also helps to maintain continuity and preserve client relationships, which are vital for long-term business success.

But is participating in your firm’s sunset program always the most financially optimal option? 

That depends on your particular set of circumstances and goals for your book of business. Deciding to retire fully or reduce your work hours significantly is an important undertaking. There exist numerous legitimate choices for individuals approaching retirement as advisors. By engaging in early planning and establishing a clear path for the future, you can take control of your destiny and avoid being at the mercy of external factors when determining your exit strategy. This requires strategically contemplating your professional journey, regardless of the stage you are in.

In essence, the available retirement alternatives
can be categorized into three main groups:

In essence, the available retirement alternatives can be categorized into three main groups:

1. Participate in your current firm’s sunset program as a retiring employee.

This program typically allows advisors to gradually transition into retirement while still maintaining a role within the company. It provides an opportunity to pass on knowledge and mentor the next generation of advisors while gradually reducing workload and responsibilities.

2. Move to another traditional firm, negotiate your retirement and/or participate in the other firms’ sunset program. 

This option allows advisors to continue working under a different firm while also benefiting from retirement-related arrangements. This option is suitable for advisors whose business is valued more favorably in the external market than with their own firm. By leveraging their experience and expertise, advisors can secure a position that aligns with their retirement goals and provides a smooth transition into the next phase of their lives.

3. Go the independent route.

This option grants advisors the freedom to establish their own practice or consultancy, allowing them to maintain control over client recommendations, their work and schedule. Going independent offers the opportunity to capitalize on their network, reputation, and years of experience to serve clients directly and on their terms. While this path requires careful planning and a solid client base, it can provide immense satisfaction and financial rewards.

The case for participating in your current firm’s sunset program

A sunset program can be a good option for retirement in various situations. It is particularly suitable for advisors who still enjoy their work but want to gradually reduce their commitments and transition into a less demanding role. This option allows advisors to maintain a sense of purpose, continue contributing to the firm's success, and mentor younger advisors.

Sunset programs also provide financial stability as advisors can receive a steady income during the transition period. Additionally, it allows advisors to gradually adjust to the lifestyle changes associated with retirement, minimizing the potential emotional and psychological impact of a sudden and complete exit from the workforce.

Overall, a sunset program can be an attractive retirement option for advisors who desire a phased approach to retirement, value their role within the firm, and want to ensure a smooth transition for themselves and their clients. This is particularly attractive when other options available to advisors may be wrought with legal complications, financial risks or long-drawn-out negotiations with various parties involved. However, this is not always the case.

The case for moving business to another firm

This can be a compelling option for advisors, especially when their business is valued more favorably in the external market than with their current firm. One of the primary advantages of this option is the opportunity to leverage one's established client base and industry reputation to secure a favorable retirement arrangement.

Advisors may find that another firm recognizes the value of their book of business and is willing to offer more attractive retirement-related incentives, such as a higher payout rate, enhanced transition support, or a dedicated sunset program tailored to their needs. By joining a new firm, advisors can benefit from fresh perspectives, expanded resources, and potential growth opportunities. The transition to a different organization can breathe new life into their practice and provide access to additional tools, technology, and support systems that can enhance their ability to serve clients effectively.

Furthermore, they may still enjoy the benefits of a sunset program with this other firm allowing them to gradually transition into retirement while still maintaining an active role. This phased approach provides a sense of continuity for clients and ensures a smooth handover of relationships and responsibilities. It also affords advisors the opportunity to mentor junior advisors and pass on their expertise, contributing to the development of the next generation.

The case for going independent

Moving their book of business to their own independent firm presents a compelling case for advisors seeking greater autonomy and control over their professional endeavors. This option allows advisors to establish their own practice or consultancy, granting them the freedom to make client recommendations based on their expertise and convictions, while maintaining control over their work and schedule.

One of the primary advantages of going independent is the opportunity to leverage their network, reputation, and years of experience to serve clients directly. Advisors can build a brand around their unique value proposition, tailored to the specific needs and preferences of their client base. This personalized approach fosters stronger client relationships and enables advisors to provide tailored, holistic solutions that align with their clients' goals. Advisors can align their practice with their own values, investment philosophies, and service standards, creating a sense of fulfillment in their work. They have the freedom to innovate, implement new strategies, and explore niche markets that may not have been viable within a traditional firm structure.

Financial rewards can also be significant in an independent setting. Advisors have the ability to set their fee structure, retain a larger portion of the revenue they generate, and benefit directly from the growth of their business. As their practice expands, advisors can scale their operations, hire additional staff, and increase their earning potential. However, it's important to note that going independent requires careful planning and a solid client base. Advisors need to consider the costs associated with establishing and maintaining their own firm, such as office space, technology, compliance, and marketing. They must also ensure they have a robust client pipeline and a strategy to attract and retain clients in a competitive landscape.

Ultimately, the right choice for you will depend on your personal goals and what the external market is willing to offer you. There are risks with each option, as are unique benefits both financial and non-financial.

The benefits of being independent

While going independent isn’t for everyone, for those entrepreneurial minded advisors independence can deliver:
  • A higher level of satisfaction about your work 
  • ​Enhanced time management which allows you to do more of the things you love to do
  • Higher payouts and the ability to build a book of business that has future value
Independence is all about flexibility, control and potential.
If you’re a Series 65/66 holder looking for a competitive edge, greater flexibility, and ways to succeed in all market conditions, then get in touch. Over the last 14 years, we have differentiated ourselves as a boutique firm that offers its prospective reps some of the greatest of advantages in the advisory space: generous payout grid, top-tier marketing support, all-weather investment strategies, individualized attention, and streamlined compliance processes. 

We are currently seeking representatives to join our team. All our positions are 100% remote. Click the button below and select the time which works best for you.
Copyrighted 2023
All Rights Reserved
Copyrighted 2022
All Rights Reserved
Portfolio Medics is an SEC-registered investment advisory firm. 
27499 Riverview Center Blvd Bonita Springs, FL 34134 
Phone: (239) 444-1766

Advisory services offered through Portfolio Medics.

Views expressed by Portfolio Medics are theirs alone. This summary is for informational purposes only and shall not constitute advice and are not an offer to buy or sell, or a solicitation of any offer to buy or sell investment products. Different type of investments involve varying degrees of risk, and there can be no assurance that any specific investment will either by suitable or profitable for your portfolio. All investment strategies have the potential for profit or loss and past performance is not guarantee of future success. Economic factors, market conditions, and investment strategies will affect the performance of any portfolio and there is no assurances that it will match or outperform any particular benchmark. Past performance is no guarantee of future performance or profitability. The types of investments discussed also do not represent all the securities purchased, sold or recommended for clients. Stated information is derived from proprietary and non-proprietary sources that have not been verified for accuracy or completeness. While the firm believes this information to be correct, we do not claim or have responsibility for its completeness, accuracy or reliability.