TRANSITION TALK

The market for wealth management firms has dramatically changed. 20 years ago, people didn’t see resale value in these businesses. When an advisor retired, they hoped they’d find someone who would agree to take over their book. As the industry matured, sales slowly started taking place. It wasn’t easy – there were no standards for valuation or deal terms, no strategies for client retention, few financing options, and concerns about liability.

These days, those issues have mostly been resolved, providing for a real marketplace and more competitive deal terms for businesses. It’s a seller’s market, and in our open marketplace sellers often field 75 or more inquiries for a listing. Practices are being purchased by synergistic partner firms that are aligned from principles, staff and client standpoint. There are many more options for an advisor than existed 20 years ago.

EXPLORING YOUR OPTIONS

Every firm I have talked with in the last year – both large and small -- has received inquiries and offers If your business plans do not include selling, you could file the offer away for the future in a file that may well include other such letters. On the other hand, maybe the offer sparks your interest to learn more about what options you have in the current marketplace. Selling what you have built can be a good strategy when the time and circumstances are right.

Recently, a client told us that since she had implemented a formal continuity plan, her clients have felt more comfortable adding assets to their portfolios now that their tenure with her business is protected. This stability of continuity is an important cornerstone for continued business growth and client retention.

Currently, FINRA requires that member firms have a Business Continuity Plan (BCP) that is written and can be made available upon request. But it isn't just compliance; having a clear and written continuity plan reassures your clients' concerns about the security of their investments at your practice. 

FP Transitions has been helping financial advisors document, implement, and annually update their formal continuity plans for well over a decade. Now through our EMS™ Professional program, we are able to leverage our extensive network of advisors to help connect you to the right continuity partner for your unique business.

Single owner practices without written, actionable continuity plans and identified continuity partners, are at a disadvantage to larger businesses and firms with built-in succession plans.

As the owner and person that has built a trusting relationship with your clients, you know that it is crucial to protect their wealth as well as your business as a whole. The most challenging aspect of developing a continuity plan, however, is finding the right partner. Of course you want to be discerning when it comes to the person who is going to care for the business you’ve built when you no longer can. Fit is always the foremost consideration.

Introducing Continuity Partner Matching!

Searching for the right continuity partner within your immediate community and professional networks can force you into a partnership that isn’t the best match for your clients, or worse, can result in no partnership at all! Now FP Transitions is offering the ability to leverage the most extensive network of advisors in the industry, to help connect you to the right continuity partner for your unique situation.

The Continuity Partner Matching service, available to EMS™ Professional members, allows you to tap into our team of professional coaches and our network of over 30,000 advisors. We’ll guide you through the selection of interested continuity partner candidates based on specific time-tested criteria as well as your specific requirements.

Once you have identified the right person, business or firm, we’ll help you get the proper documentation and agreements in place to ensure the continuity of service for your clients in the event of death or disability, and help you to protect the value of the business you’ve built.

Please let us know if we can assist you in this vital step of growth in your business, and reassurance to your clients. If you are already an EMS™ Member, reach out to your representative to see how we can help. And if yo are not an EMS™ Member, you can find out more about the program HERE.

Everyone has a unique vision of their future; we’re all trying to forge a path with our careers to that end goal where we can take a big breath and simply enjoy the life we’ve earned. While we might have an idea of the specific journey we will take, it’s important to remain open to alternate routes and unexpected shortcuts along the way. The hardest step on this journey for most is that which takes them out of the professional world they’ve been a part of for many years.

Unique goals and unique journeys require a creative strategy. For financial advisors, the Sell and Stay® path offers flexibility and freedom for an exit from the industry. There are advisors in the industry who have built a team of advisors with next generation owners and have built an internal transition into the sustainability of their business. The majority of our industry, however, is still made up of single-owner practices. Luckily, Sell and Stay® offers them the option of a similar exit path.

During our 2021 Mid-year Market Update, in addition to up-to-date transaction data and trends, our experts, M&A Director James Fisher, JD and CEO Brad Bueermann, explored some myths and misconceptions about the current M&A marketplace.

The problem with misinformation is that as a buyer you may find yourself discouraged from exploring acquisitions or mergers as a growth strategy or from inquiring on businesses that could be a great fit and expand your reach. As a seller, misinformation can lead you to compromising your fit criteria or from exploring a wider pool of buyers.

The following are the top five misconceptions we hear from advisors and from other market participants.

MYTH: Reported transaction data shows a complete view of the industry M&A marketplace.

No current reporting of annual M&A transactions–including ours–encompasses activity across the entire industry. Even if data is being reported based on publicly advertised transactions, many are private and not publicized as larger M&A deals tend to be. Details and terms are often kept confidential regardless, and, as the old adage goes, "the devil is in the details." So, comparing the data and transaction activity across firms participating in M&A can be tricky.