One of the best things about financial advisors and wealth management professionals – you love your job. You enjoy the puzzle and the prospecting. You enjoy the paycheck. And you enjoy your clients. We know this because we know you. This is what you and your peers tell us every day on the phone, in emails, and at conferences.
This is why when it comes time to talk about an eventual exit and the “R-word” you wield so effectively with your clients, you brush off the conversation. You say, “It’s too early to talk about that, ask me again in five years.” And the next year you say the same thing, and the next, and the next, until suddenly it’s time and you just gotta work with what you’ve got.
On our side of the industry, we shake our heads and call it the “Rolling 5-Year Plan.”
Topics: Continuity Planning, Succession Planning, Talent Recruitment, Sustainability, Sell and Stay™
Experienced business owners recognize the importance of tracking and monitoring their firm's value over time. They know this business is one of their largest assets, and by measuring and monitoring it, they are enabling its growth, protecting its value, and ensuring a sustainable - and profitable - future. Understanding value and monitoring it over time is the starting point for every business plan: organic growth, acquisition, succession, talent recruitment, everything.
Topics: Continuity Planning, Succession Planning, Continuity, Sustainability
If you are preparing to become the successor of an RIA firm, you may have a lot of questions and concerns about how to negotiate the best deal and what lending options are available to help you finance the succession.
To help you answer these questions, Alicia Chandler, President and Susie McEuen, Strategic Markets Vice President of Oak Street Funding sat down with FP Transitions’ Director of Valuations, Aaron Wells, and CFO, Eric Leeper, to share their insights and tips on what successors need to know.
Topics: Continuity Planning, Succession Planning, Deal Structure, Continuity, Sustainability
Often used interchangeably, the terms Continuity Plan and Succession Plan refer to very different business planning elements. Continuity plays an essential role in defining what happens upon a “triggering event”– sudden absence, disability, death or otherwise, while succession refers to an intentional plan that brings multiple generations of owners into the business, typically over 10-15 years, to carry it forward for decades to come. We refer to this goal as sustainability.
Topics: Continuity Planning, Succession Planning, Continuity, Sustainability
While continuity plans are required by the U.S. Security and Exchange Commission (SEC), many advisors stop at the bare minimum, leaving their firm open to major disruption, and potentially an eroded value that leaves family or colleagues holding the bag.
Topics: Continuity Planning, Exit Planning, Continuity Partner Matching, Transition Plan, Continuity
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Designing a sustainable firm is something that requires intentionality. For most advisors, this is always the goal, but having time to monitor your progress and course-correct is simply overwhelming. It gets shelved in the back of our brains, and its not until something unexpected crops up when we realize its time to revisit our goals.
Topics: Continuity Planning, Organizational Structure, Entity Structure, Sustainability, Business Operations
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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 you are not an EMS™ Member, you can find out more about the program HERE.
Topics: Continuity Planning, FP Transitions, Continuity Partner Matching, Enterprise
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Topics: Continuity Planning, Webcasts, Multi-Generational Ownership, Organizational Structure, Business Growth, Tip of the Week, Business Value, Client Success, Sustainability, Client Relationships, Business Operations
The single, biggest threat to an independent advisory practice is not the lack of a succession or exit plan, it is the lack of a plan to protect client interests and business value in the event of an owner’s sudden death or disability. And still, relatively few practice owners have implemented a reliable continuity plan.
As you put together your own unique plan, here are six best practices to consider as you create an effective and practical continuity plan:
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Put your plan in writing. Create a concise, clearly-written continuity plan so that it works under adverse circumstances, without your ongoing involvement.
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Use an industry-specific valuation for market value in a transition to a third-party buyer or external continuity partner, or an equity-based valuation for equity ownership interests as is common with internal continuity partners. For situations like death or disability, it is important to quickly, and accurately determine value. Be sure the determined value comes from a credible, third-party opinion with the database and accreditation to support the result.
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Update your buy-sell agreement and valuation on an annual basis. As your business grows, you’ll want to capture current value and deal terms that support an agreed upon purchase amount. A routine review of the agreement can help practice owners ensure that their document addresses changes in circumstances and provides for evolution of the plan.
Topics: Continuity Planning
Completing a formal valuation is step one. Step two is securing that value with a continuity plan.
Having a formal, written continuity plan in place for the unexpected exit of an owner–especially if they’re the only owner–is paramount to ensure your practice and its clients are protected.
Annually updating the plan is just as important as the signatures on the document itself. Your plan and contingencies must evolve along with your business. An up-to-date and accurate agreement will prevent confusion in an already emotional and chaotic situation should the plan need to be implemented. Each year you must account for any business growth (or decline) as well as changes in compensation, personnel, client base, and other practice details.
The infographic below breaks down some continuity basics and options.
Ensure your business is safeguarded against the unexpected. Explore FP Transitions' Continuity Planning services or call 800.934.3303 to update (or establish) your continuity plan.
Topics: Continuity Planning, Business Growth