Part 2: Succession Planning - The Next Big Thing

Chris Reynolds • Mar 16, 2022

As a continuation of my last Rant on the next big trends in our industry, there is one trend that cannot be ignored – succession planning.

The wealth management business has two big issues. First up, 50% of the assets under administration managed by independent advisors are held by advisors over the age of 60. The second issue is that there are a limited number of young advisors coming into the business. In a space with approximately $800 billion in assets under administration, this is a $400 billion dollar problem.

“In a space with approximately $800 billion in assets under administration,

this is a $400 billion dollar problem.”

If you have less than a 10-year time horizon in this business, it is time to ask some questions and make some serious decisions. If it were me, I would be asking questions like:

1. How is my business valued, and how can I maximize that value?

For many of us, our businesses make up one of the largest portions of our net worth. The value of a business is always directly proportional to how transferable it is to another person. Simply put, if your business is easy to transfer, it is worth more. If that is the case, my focus would be on simplifying my offering, setting up repeatable processes for dealing with clients and incorporating the use of technology.

2. Who can take over my business?

When I sold my business, my biggest concern was how my clients would be treated in the future. After all, most of my clients were like friends. I cared about them and their future well-being. That was something I took seriously as finding the right person is difficult. You need someone who is qualified, client-focused, young, wants to be an entrepreneur, and can afford to pay you. People like this are not easy to find. Many people look to their children to take over the business. However, this is not always an easy task. Adult children still need to be qualified, trained, and have the right mindset to become a business owner.

3. What is my time period in transition?

Many advisors want to slow down but don’t really want to stop. They like dealing with clients and helping them solve problems. They would like to ease out of the day-to-day things like managing their staff, marketing, etc. and just focus on their clients. How would you do this in a systematic manner?

These are important questions and it’s critical to explore all your options.

Have you mapped out your own succession plan?

If you’re interested in putting a succession plan in place and want to do it at your own pace, I recommend reading our playbook where you’ll find some solid strategies to start.

If you already have a lot on your plate and want some no-obligation guidance, I’m available and happy to help. Reach out to me to learn about our entire succession planning process, regardless of whether you’re buying or selling a business.

Cheers,

Chris

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Before You Sell - Consider This In Your Succession Plan

By John Novachis • 12 May, 2022

In his latest blog, John Novachis, EVP at Investment Planning Counsel sheds light on emerging trends catching the attention of Advisors, but are these the right choice when considering your succession plan?

Valuating your Book of Business – Where “Art meets Science”

By John Novachis • 07 Dec, 2020

When speaking with independent financial advisors, I'm often asked “what is my business worth and how can I make it MORE valuable?” The issue with most valuation methods is that no single approach is 100% correct. Many involve making assumptions that can each impact many “sensitive" variables. In my simple world, the value of any business or transaction for that matter is what a seller and buyer agree is a fair price. To reach an agreement on a fair price, both parties need to see value in the deal.