The growth and profitability of your business are interconnected. Top-line revenue growth is essential, but it is no good without bottom-line profitability.
Balancing growth and profitability comes down to compensation structure and the equity pathways created for owners of the business. The profits generated through properly structured equity pathways are a catalyst for growth and the means to accomplish long-term strategic objectives including recruiting new talent, internal succession, and acquisition.
In our newest webcast, VP of Research and Analysis Eric Leeper, CFA®, discusses compensation solutions for businesses in varying stages of growth and how these strategies can boost both top-line growth and bottom-line profitability.
View webcast clip below and click here to watch the full video.
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Topics:
Compensation,
Succession Planning,
Equity Pathways,
Enterprise
Over the last ten years, increasing numbers of advisors have begun the process of creating sustainable businesses. Many advisors started out as a book or a practice—one-generational models. They took steps to create much more valuable, multi-generational businesses by focusing on enterprise strength and setting up or restructuring essential business structures.
The M&A marketplace is becoming increasingly competitive. Businesses need a strong value proposition to step away from the crowd. Owners who have taken steps to work on building their enterprises are in the best position to leverage their unique business aspects to access more growth opportunities and become successful acquirers or merger partners.
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Topics:
Succession Planning,
Multi-Generational Ownership,
Organizational Structure,
Business Growth,
M&A,
Sustainability
The transfer of ownership to a team of next generation talent allows a business to leverage the individual strengths and fresh energy of a younger generation. As a new advisor, ownership provides stability, equity stake, and voice in the future of the business. As a founder, incorporating this team elevates your business, secures longevity, and sparks a new level of growth. The arrangement creates a win-win opportunity for both the founder and the next generation owners.
In our new Roundtable Talk, Elite Client Consultant, Kem Taylor, and our President and Founder, David Grau Sr., JD, discuss the process of going from next generation advisor to next generation owner and the common questions that come with it. They explore the benefits for both founder and next generation owners as well as the importance of communication between the generations for a successful integration.
Click here to watch the full, unscripted discussion.
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Topics:
Succession Planning,
Talent Recruitment,
Equity Pathways,
Enterprise
Independent financial advisors face an almost overwhelming set of challenges, but with challenges come opportunities. Many of these challenges fall into areas of:
- Mergers & Acquisitions
- Growth & Profitability
- Talent Retention
- Succession Planning
These opportunities and challenges are often interrelated. Tackling one challenge often helps solve another, thereby strengthening your business in other ways. A successful acquisition is supported by a strong enterprise that is capable of handling exponential growth, and building a strong enterprise requires the incorporation of next generation talent. Retaining and nurturing next generation talent is made possible with the proper compensation systems, and maintaining an effective compensation system demands business profitability. Bottom-line profitability increases when it is properly balanced with top-line growth. Finally, to bring it all together, growth is supported by building a strong, sustainable enterprise.
In this new webcast, President and Founder David Grau Sr., JD, discusses the top challenges and opportunities of the profession and how they can be addressed using an end-to-end, integrated strategy.
View webcast clip below and click here to watch the full video.
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Topics:
Compensation,
Succession Planning,
M&A,
Talent Recruitment,
Equity Pathways,
Enterprise
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Whether you are buying or selling, it is important to understand what is being bought and sold and what expectations both the buyer and seller have of each other. Absent these details, it is difficult, if not impossible, to determine if an offer is fair. After all, “fair” is a relative term. The question of fairness would be easy to answer if all deals were done the same way, but the reality is they are not. Nonetheless, there are still common attributes to most deals that can shed light and aid in understanding the underlying terms. This in turn helps both buyer and seller assess the reasonability of an offer.
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Topics:
Business Value,
Deal Structure,
Buying & Selling,
Trends in Transactions Study,
Transactions
Advisors constantly seek an answer to the questions “How can I grow faster?” and “How can I increase the value of my practice?” Generally, their focus is on acquisition. However, growth and value are not singular concepts. In other words, achieving a rapid pace of growth needs to be tackled through multiple facets, and ultimately, growth will be a driver of value. However, many practices are not adequately equipped to grow at the rates they are striving for. Technology provides many of these opportunities. Investing in technology has a demonstrated relationship to higher growth, more affluent clients, increased profits, and increased value.
The rapid pace of technological advancement has provided financial advisors more opportunities to reach a broader client base and manage client relationships more effectively and efficiently. By implementing and effectively utilizing web-based advertising, digital conference rooms, client relationship management (CRM) systems, and billing and portfolio management software, advisory practices of all sizes are able to more closely track their performance and focus their efforts on the market segments they wish to target.
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Topics:
Business Growth,
Business Value,
Trends in Transactions Study
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There has been a fair amount of talk over the past decades about consolidation in the financial services industry. Most of the white papers and articles addressing this concept have presented it in a negative light as though it signals the end of the lifestyle practices that dot the landscape in this profession. Industry regulation, growth, technology, fee compression, competition, and aging advisors forced smaller practices to consolidate just to survive. At least that was the working theory.
As the original organizers of the open marketplace for independent advisors seeking to sell or to acquire, we have a slightly different perspective on consolidation; we view it in a very positive light. Consolidation looks very different than what the prognosticators laid out decades ago. From our vantage point of working with businesses below $2 billion in AUM, we’ve observed the industry is indeed experiencing some consolidation, but not only due to acquisitions or roll-ups by companies like Focus Financial, United Capital, or Dynasty. The consolidation that we see every day is owners of stronger, sustainable enterprises acquiring smaller, one-generational books and practices.
Viewed in this light, how better to look after 250 clients or households when a single-owner advisory practice nears retirement than to find a very similarly structured business that can step in, take over, and provide for the staff members as well? This process works for the buyers, the sellers, and, most importantly, the clients.
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Topics:
Multi-Generational Ownership,
Organizational Structure,
Business Growth,
M&A,
Sustainability,
Trends in Transactions Study
Our new Trends in Transactions and Valuation Study includes expert insight, commentary, and predictions for the state of the financial services industry. The study dives into last year’s M&A numbers and examines how industry businesses and their values have evolved over the last five years.
This comprehensive, 50-page study features:
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Topics:
Business Growth,
M&A,
Business Value
In our new Roundtable Talk, Founder and President, David Grau Sr., JD, and Elite Client Consultant, Kem Taylor, CBEC®, explore internal succession and describe how both the succession process and business growth can benefit from multigenerational experiences and knowledge from all owners.
They also discuss other factors that benefit the succession planning process, including:
- Acknowledging the "time" factor – having enough time to plan for, implement, and make adjustments to a gradual, internal transition of ownership
- Helping next generation advisors understand the benefits and responsibilities of ownership
- Recognizing that each succession path is different
- Exploring "where you are" and "where you're going" before jumping into the process
Click here to watch the full, unscripted discussion.
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Topics:
Succession Planning,
Talent Recruitment,
Equity Pathways,
Enterprise
As more wealth management businesses look to internal succession, more new owners are being created. As a next generation advisor, you should consider whether ownership is the right path for you, and it is important to understand what ownership entails. Owners of a privately-held business, even with a minority position, enjoy several rights and privileges in exchange for their investment in the company, but they are also responsible for meeting certain obligations.
The following rights and responsibilities apply to all owners whether the business is a corporation governed by bylaws or a limited liability company with an operating agreement.*
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Topics:
Succession Planning,
Multi-Generational Ownership,
Business Growth,
Next Generation,
Sustainability
