Exiting your advice business: is retirement the only option?

by | Nov 19, 2021

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When it comes to exit plans, financial planning business owners face a choice between a number of different options. In this blog for IFA Magazine, Wealth Holdings’ Norman MacLeod talks through some of the most popular options that principals are likely to consider.

Financial Planners spend their careers helping their clients put plans in place for every stage of their life and particularly retirement, but it is just as important for adviser firms to consider their own succession options. It’s surprising, however, how often we come across principals without a clearly defined plan to capitalise their work and exit the business.

‘if you fail to plan, you plan to fail’ – Benjamin Franklin

In our conversations with principals we find there are a number of approaches to retirement, all of which can be met by working with the most appropriate partner in advance of any major decisions being made. Key to all of these is to clearly understand your own requirements and aspirations, be clear in what you want to do next, and work with partners who can help you find the best solution. You will normally only sell your business once, so invest the time in getting the best outcome for your family and yourself, your clients and your staff. So what are your options?


Sell and retire?

There is an abundance of consolidators and acquirers who would be delighted to acquire a client bank but not take on the services of the retiring adviser. They will have planners keen to welcome on board new clients and perhaps it is easier for those planners, embedded in the company culture and proposition, to explain the new way of working to the newly acquired clients (let’s not open the well-worn debate on client ownership here, perhaps a subject for a later item). For the retiring planner a smooth handover of clients is normally expected, a chance to thank them and say goodbye before retirement, travel, golf or whatever adventures the next stage of life is going to bring.

We have a client looking to acquire on this model in London/SE. Run by two chartered and experienced individuals with a shared passion for straight talking, goals-based financial planning. They are looking for a directly authorised business to acquire from a seller who is retiring to pursue other interests and shares in their vision and mission – building a boutique wealth management business which aspires to enrich and strengthen the legacy of clients, employees and community for a financially secure future with clear and simple financial planning.

Sell and plan?

For many there is a great deal of comfort to be had in joining forces with a larger organisation and shedding the seemingly ever-increasing burden of Compliance, PI renewals, Regulatory Returns, Property issues, fixing the photocopier and all the other joys of business ownership. Retirement is not yet the priority, but sharing some of the daily activities to spend more time doing what you enjoy most, spending time with clients, remembering the days when this was your main role rather than a small part of their weekly activity, can be very appealing.


I recently read an article that suggested planners spend less than 50% of their time on client activity and less than 20% in front of clients.

There are plenty of options where planners can sell their practice but carry on as a planner focused on clients’ needs and securing good outcomes for them. Principals need to be aware of IR35 and the impact of the rules when considering a sale, potential change of status and move to an employed position, so be sure to take expert, specialist advice and consider the implications before making any decisions.

We represent a high-growth business with an experienced management team based in Bristol, looking to acquire businesses in the West of England and South Wales as going concerns, including all planners and support staff. They are flexible and pragmatic, and open to conversations with any principal that shares their client centric, professional approach to financial planning.


Sell and plan (a little less)?

Just as above there is a genuine attraction for some in slowly winding down, leaving some of the day-to-day issues to others whilst concentrating on working with a smaller number of clients. A gradual handover during a 2-5 year period leading to retirement is certainly an attractive way to spend the final few years of your career for many, and why not? Those special clients that have become friends, work and pleasure mixing nicely without the PI renewal and IT Issues getting in the way as you put in place the essential elements for your retirement.

Sell and grow?

On the other hand, whilst not everyone is ready to retire yet, a sale can still be an attractive proposition. We have increasingly seen firms keen to acquire a practice and support the principals with much of the operational infrastructure, but want the principals to remain in charge of the practice on a day to day basis, grow the business with the support of the parent and share in the value of that growth. This can be a very attractive option for many as it relieves some of the burdensome task of the principal, brings additional resources and expertise to the table and facilitates the opportunities and benefits of growth.

Several of our larger clients take the view that their best route to long-term growth is to acquire businesses and keep their successful management teams in place to drive this, and share in the future value and profits. Models vary, but if any principal were interested in raising capital but continuing to run their business, with additional support from a larger partner with financial muscle, there are a number of options we could share with you.


Internal succession plan?

An internal succession plan can be a very attractive proposition. New individuals with younger blood who have trained and grown with the business and understand the culture and processes, know the clients and are trusted by them ticks lots of boxes. It could be a family member or a group of staff.

Octopus Investments produced a report in August 2019 that suggested 69% of firms do not have an adviser below 30 years old.

The key to this is, of course, planning as this approach takes time to identify the correct people and agree the succession plan. Finance is key in identifying not only the individual(s) but how the deal is to be financed and structured. A long term earnout is normally going to be easier to arrange than large capital payments just at the point when the principal member of the team is leaving. Much of financial planning is ensuring the right money is in the right hands at the right time and this is very true of any business looking at an internal succession plan. Of course, this course of action provides a whole range of alternatives for the principal in staying on, slowing down or retiring.


In addition to the considerations above there are many variations on payment schedules, earn out periods and even downstream alignment to consider before we consider the approach to your office, brand, staff etc. We have written previous articles considering share v asset purchase and valuation methodologies and in future will look at possibly the most important factor when considering a future home, cultural fit.

Click here for information about Wealth Holdings

For further information Wealth Holdings Ltd services, or to discuss – informally and in confidence – your plans contact Norman MacLeod on 07851 399995 or email norman@wealthholdings.co.uk



Norman MacLeod is Head of Acquisition at Wealth Holdings

His role at Wealth Holdings is to identify businesses which could benefit from working with a trusted partner to de-risk their financial futures whilst ensuring continuity for their clients and continuing opportunities for staff. He is always happy to hear from Principals for a no-obligation chat about Wealth Holdings’ proposition and their own aspirations and plans for the future.




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