Semi-retired by 37: One RIA’s roadmap

In my practice, I take my clients through a process of values-based financial planning, which digs into the “Why?” of their financial plan versus just the “How?” One day recently, I had a lightbulb moment: “Why aren’t I doing this for my career, my family and myself?”

At 37, I’ve put six years into building my fee-only RIA. Now I realized I’d hit a crossroads. With no plans to expand my practice beyond a solo shop, it was time to decide if I want my practice to be a small part of my life over the span of my career or if my main goal is to spend the bulk of my time building a business.

After experimenting with two approaches to financial planning and investment management, I believe I’ve found the approach that’s right for me.

Option 1: Build a cash-flow monster and work full-time

One of the options available is to forgo the lifestyle practice. I would relentlessly build my practice, foreseeably putting in 40-plus hours a week and 11 months a year. In that way, I should be able to triple my client load and, with the fee minimums I have put in place, add over $500,000 in additional revenue.

Once I get to that point, I’ve locked myself into a full-time job with little wiggle room. Let’s say it takes 10 years to get to this point and my take-home pay surpasses $500,000. If our family spending remains constant, we’d be financially independent 10 years after that — by the time I’m 57. I could then sell the business to add an extra infusion of capital to our retirement, queuing up a retirement for my wife and I when we’re 58.

Except that vision doesn’t excite me at all, mainly because I know myself. I am the spender in our relationship. If I was earning over $500,000 per year, our lifestyle would not remain constant. We would be spending more money, being more generous and not saving as much as I projected. The plan also doesn’t provide much flexibility, which is what excited me about starting my own business in the first place.

Here’s the second path I considered — and am currently putting into action.

Option 2: Have my business support my life and live like I’m semi-retired at 37

The last 12 months have been the best of my career. I prepare a plan for every new client and, from there, we decide if I’m going to manage the assets for them. I’ve added some wonderful clients and let go of some non-ideal clients.

My recurring revenue provides me a solid income and a healthy amount of revenue to experiment with software and marketing approaches within the business. By implementing technology and scheduling sets of clients into certain months of the year, I’ve seen my take-home pay increase by 35% and my workload has decreased.

Dave Grant

If my income were to increase another 25%, my wife and I would be achieving our stretch goals in our personal life. If I’m able to do all that and maintain a part-time schedule, that leaves me a lot of free time to pursue my ideal life. With some deliberate design, I’m able to get most of my work done in four to five months of the year. During this time, I’m working approximately 20 hours per week enabling me to take my kids to school and facilitate their extracurricular activities. But what happens with that extra capacity?
I’ve already started filling it — I now work with a trainer three mornings a week, and am training for a sprint triathlon. I’ve got a growing list of personal goals to accomplish, which requires me to have some free time during the day. I want to learn Spanish; I want to learn how to play piano and ultimately progress into jazz piano; I want to mentor more children who are going through a tough time; and the best one, get natural stress relief by hanging out with my dog.

I want my life to be filled with things that make me smile. This lifestyle might require me to work past 65 to become financially independent, but if I’ve been semi-retired since 37, would it even matter that much?

When I compare options 1 and 2, it becomes a no-brainer. Our lives are not guaranteed. In the first scenario, I could work until I’m 58, become financially independent, and die the next day. During my career, if I’m focused on building a larger firm, I could potentially miss out on fun things with the family. My stress levels could be a lot higher and there would be less time to incorporate margin into my day — time which allows me to process life. As an introvert, this is essential for me!

Meditating on the second scenario fills me with peace and calm. I’m still engaged in the career I love but it doesn’t define me. That’s a piece I really struggle with. Men are often defined by the careers we pursue, much to our detriment. If I make my career a portion of my life — both in time and effort spent — I can develop a healthier sense of self.

Will this work for your career?

We’ve all talked to clients who are at the pinnacle of their career, earning more money than they dreamed of, but they can’t walk away. They’ve dedicated their life to getting to this point, and for some, it’s not all it’s cracked up to be. Maybe you find yourself in that situation? If you don’t like it, how can it be reversed?

If you’re working for a company, it’s not going to be easy. If your situation allows, and your employer is amenable, maybe you transition to part-time. This is the easiest way to start redesigning your time to support a new life. Or you could move to a three or four day workweek, putting in 10 to 12 hours a day. By freeing up those one to two days a week, you now open up a number of possibilities on how to fill that time.

If you own your own practice, it’s a lot easier. You know how much revenue you need to support your personal goals and can design your practice around that. You could start slimming down your client base, focus on a certain niche to streamline your time and effort, or even redesign your business model so that you have recurring revenue versus starting from scratch each year.

But before you do this, it helps to have a concrete “Why?” to make the process easier. Just as we coach clients as they enter retirement, don’t make these changes until you have something planned out to move to. Lay out what you’re going to do with your extra time, and understand what’s important in your life and how to incorporate activities that support that.

But most of all, adapt your work life so that it starts to become a piece of you and not something that defines you.

This road isn’t for everyone — even my wife doesn’t always understand the design of my career. It’s not the norm, so even my emotions get weird sometimes when I think I should be working harder and longer.

Before I do that, I catch myself and remind myself of why I started my business in the first place. It was to live life on my terms, and as today is the only day I am guaranteed, I need to fill it with things that are the most important.