Is now the right time to sell your IFA business? With the IFA market currently experiencing high valuations and strong demand, deciding when to sell your business can be daunting. David James, Commercial Acquisitions Director at AFH Wealth Management, a firm that has been successfully acquiring IFAs for more than 20 years, shares ten key indicators that could signal it’s time for IFA business owners to consider a sale.
For many IFAs, the decision to sell their business is one of the most important choices they’ll ever make. Selling your advice business to a larger firm can offer both financial security and operational stability or simply allow you to enjoy your retirement.
The current market for IFA firms is strong, with consolidators offering competitive multiples for well-run businesses. Valuations remain high and for those business owners who wait too long – particularly in uncertain economic times – it could mean missing out on the best possible deal.
But how do you know when the time is right?
In the following analysis, David points out ten signs that might mean it’s time to sell your IFA business.
- You’re reaching the stage where you want to de-risk your future
From market uncertainty to political change at home and abroad, we’re living in volatile times. Throw in ever-changing financial regulations and you’d be forgiven for thinking that now is a sensible time to de-risk. Selling your business provides a lump sum, giving you stability and reducing your reliance on ongoing revenue. It also allows business owners to diversify personal wealth, rather than having it tied up in the business.
- Running your own investment proposition is proving difficult
Running your own investment strategy can give your firm a degree of control, but do you have the time to dedicate the due diligence required to deliver a strong investment strategy for your clients? And is this taking you away from the part of the job you love most – spending time with your clients? Larger firms often benefit from bespoke investment teams and model portfolios, which can provide positive outcomes while you can get on with the job of advising clients.
- The end of the tax year is filling you with dread
It’s no secret that many advisers find themselves drowning in work as the end of the tax year looms. If tax year-end pressures have become increasingly stressful and difficult to manage, it could be a sign that you lack the capacity or infrastructure to handle busy periods effectively. Larger firms often have bigger teams and streamlined processes that can ease this burden, allowing you to focus on financial advice rather than getting your admin sorted.
- You’re struggling with regulatory burdens
One thing IFAs can’t fail to have noticed over recent years is increasing regulatory pressure, most recently in the form of Consumer Duty. The job has changed, with compliance obligations and time-consuming reporting processes often replacing the reason advisers got into the business in the first place – spending time with and advising clients. If you’re noticing that regulatory challenges are taking up more of your time, joining a larger firm with dedicated administrative and compliance teams could free up your time to focus on financial advice.
- Your costs are becoming unmanageable
Like many industries, the costs of running an IFA firm have risen sharply in recent years. With inflation driving up anything from wages to new technology, increasing employer NICs on the horizon, and new regulatory requirements adding to operational expenses, smaller firms could begin to struggle. Selling to a larger firm can provide relief by giving you access to shared resources and economies of scale that reduce costs and improve efficiencies. Of course, the money you’ll receive from selling will also help!
- You’re finding it difficult to keep up with your clients’ demands
Whether it’s a smooth digital experience or a broader range of services – such as tax planning, trusts and estate advice, or investment management – today’s clients demand more bang for their buck. If your firm lacks the resources to keep up with these expectations, whether due to limited technology, staff, or infrastructure, selling your firm could enhance your clients’ experience with you.
- Growth is becoming ever harder to achieve
Organic growth in the financial advice sector isn’t easy. Finding new clients can be difficult, particularly with rising competition and market volatility. If you’re finding it difficult to grow, and bring new clients into the business, selling to a larger firm would not only give you access to more resources, but could provide you with additional clients as a result of marketing initiatives, helping to take your business to the next level.
- You don’t know where to start with business continuity
Sometimes, the stability of your business can be out of your hands. Unexpected events such as economic downturns, regulatory changes, illness, or key staff departures can have a major impact on a smaller firm’s ability to operate effectively. Being acquired by a larger firm provides a stronger foundation, with greater financial backing, a larger support network, and contingency planning that can help safeguard you, your clients, and your employees.
- You’re ready to enjoy a well-earned retirement
Through blood, sweat, and tears, IFA firm owners have spent years building their businesses, working long hours to serve their clients. But at some point, personal priorities change. Whether you want to travel, spend more time with family, or simply enjoy a less stressful lifestyle, selling your firm can give you the financial security and freedom to retire on your own terms while knowing your clients are in safe hands.
- Succession planning is becoming a challenge
For IFA business owners looking to retire, finding the right successor from within your own ranks isn’t always easy. This is especially true if the younger advisers in your firm aren’t interested in business ownership. If you lack a clear succession plan, selling to an acquirer ensures continuity for your clients while allowing you to exit on your own terms. Some deals will also give younger advisers the opportunity to join the acquiring firm as an employee – offering them a chance to grow their career and continue to serve their clients.
Get back to what you do best!
Selling your IFA firm is a deeply personal decision, but recognising some of these signs can help you determine whether now is the right time. One of the things I’m hearing a lot from IFA firms when I meet them is that the job of being an adviser has dramatically shifted. Ironically, advisers feel they no longer have the time to… give advice! Now is a strong time to sell and it could be the right time to capitalise on your hard work, enjoy your retirement or get back to doing the job you love.
About David James
David is AFH Wealth Management’s Commercial Acquisitions Director and is responsible for meeting with IFAs who are looking to sell their business, whether they intend to retire or to join AFH and continue advising their clients. David prides himself on close working relationships with IFA firms throughout the due diligence process, ensuring both clients and advisers enjoy a smooth transition. David has over 25 years of experience within financial services having been an adviser himself and worked within a variety of management and development roles.
About AFH Wealth Management
AFH was founded 35 years ago by Chartered Financial Planner, Alan Hudson. Alan continues to lead the business today, focusing on delivering what money can’t buy – experience, trust, and exceptional client care. AFH’s experienced acquisitions team is a group of seasoned professionals dedicated to helping IFA firms sell their business. With a deep understanding and a strategic approach to identifying opportunities, the team takes the time to understand each business’s unique strengths and goals, crafting tailored solutions that benefit both the advisers and their clients.
For more information visit the AFH website or email acquisitions@afhgroup.com.
