There’s a predictable pattern in the lifecycle of being a financial advisor.
You start your career with the “fog a mirror” or the “breathing test,” and after a few years, you have a bunch of clients—many of whom are not “ideal.”
And over time, as you get more successful, you realize you’re spending so much of your time meeting with clients, following up with clients, and walking clients off the ledge when the markets are tanking, that you have little time left for “the business of the business.”
So, you decide to bring on an associate advisor and move some of your less complicated clients over to your new advisor. All the while you continue to bring on new clients and “raise the minimum” for those whom you personally will work with.
Now, here’s where it starts to get a little trickier. You still have a substantial number of clients that you’re responsible for and you’re still slammed with the work of “being an advisor” and not an advisory firm owner. And it’s here that you reach your first business inflection point.
You must decide whether you’re building a business or building an income.
Business Vs. Income
Here’s how I make the distinction between the two.
• A business has a separation between the management of the business and the people who deliver the service or product of the business.
• When building an income, the same person does both. This person delivers the service or product and does “just enough” management to keep the income going.
The real difference is building a business optimizes for business growth and impact while building an income optimizes the tension between personal income and simplicity.
A recent podcast guest, Mary Beth Storjohann, reached this crossroads in 2019 and had to decide whether she wanted to continue being successful at building an income at her small RIA Workable Wealth, or make the jump to building a business.
Ultimately, she decided to merge her advisory firm with Abacus Wealth Partners, which at the time had about $2 billion in AUM. Concurrent with the merger, she became the Chief Marketing Officer of Abacus while continuing to serve as lead advisor for many of her clients.
Over time, she took on more management responsibility and on February 1, 2022, was promoted to the co-CEO role of Abacus, which is now a $4 billion AUM firm. Most of her original advisory clients now work with another advisor while Mary Beth focuses on her management role.