According to Fidelity’s 2015 market study the majority of financial advisors don’t have a clear succession plan in place. As a financial advisory book of business broker I have narrowed down the important things what every financial advisor over the age of 55 needs to know about selling their book.
Melissa Shin of Advisor’s Edge magazine wrote the article: ”Choose Wisely” (link:https://is.gd/choosewisely). Melissa’s article gives valuable advice what financial advisors need to look for when they are looking for a buyer of their books. She argues, with much insight, that there is a lot more than just going for the highest price when it comes to selling your book .
Mark P. Cussen at Investopedia published: “Advisors Falling Short on Succession Planning” (link:https://is.gd/advisorsuccession). The article reveals that the majority of financial advisors fail to have any kind of succession plan. Advisors need to spend considerable time to select their successors to get the best value for their business and to ensure their clients will be in good hands after their retirement.
The 3 Most Important things for selling your book:
- Do not wait – Finding a good successor is a process and needs considerable time. If you are older than 55-60 it is wise to put a proper succession plan in place.
- Price is not the most important aspect – While, at first, you might think that price is the most important thing finding your book’s buyer, I believe that finding the best fit is the much better approach. After all, if your buyer is not a good fit the retention of your book will be lower and consequently the price what you will actually receive may be substantially lower than the actual purchase price.
- Transition your business to fee-based – Transactional books are typically lower priced than that of fee-based books. If you are running managing a transactional book consider transitioning your book to a fee-based book over the next couple of years and so maximize your potential sale price.
If you are an experienced financial advisor take some time to think deeply about your succession plan. You owe to yourself and your family.
Miklos A. Nagy is a book of business broker, financial advisor, financial analyst and author. He runs his firm financial planning firm Fin-Plan and also a partner of Book Brokers, a Toronto based book of business broker firm. You could contact him at: nagy@bookbrokers.ca.
Future Blog Posts
- Title: “Experienced Financial Advisors: How to tweak your existing book of business in anticipation of its sale in the next 5 years” – A blog that describes the way how financial advisors could make changes to their business to get the price for their book.
- Title: “Experienced Financial Advisors: The type of purchasers for your book of business sale” – A blog that describes the three types of potential purchasers for your book of business.
- Title: “Experienced Financial Advisors: Referral and deferred sale of you book of business with a portfolio manager firm” – A blog that describes the benefits of having a referral and deferred sales agreement with a portfolio firm.
- Title: “Experienced Financial Advisors: “What is the optimal time for your sale of your book of business” – A blog that describes what are the main determining factors to sell a book of business for a financial advisor.
- Title: “Experienced Financial Advisors: How to structure your book of business sale to maximize your after tax sales proceeds” – A blog that describes the way how financial advisors should or could structure the sale of their book of business with the goal to maximize their after tax sales proceeds.
If you are a financial advisor and thinking about retiring and selling or referring your book of business, Book Brokers can help you in this regard. To ask any question about this article or to book an appointment to look at your particular case, please contact Book Brokers at info@bookbrokers.ca. Miklos is a book of business broker, fee-only financial planner, best-selling author, finance-related educational course writer, statistician and former Chair of the Canadian Institute of Financial Planners. Book Brokers Financial Book of Business Brokering website is at www.bookbrokers.ca and Miklos’ Linkedin page is at https://is.gd/bookofbusinessbroker.
Copyright © 2020 by: Miklos A. Nagy
The views expressed in this material are the opinions of Miklos A. Nagy through the period ended 07/20/2020 and are subject to change based on market and/or other conditions. This document contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected.
All rights reserved. No part of this publication may be reproduced, distributed, or transmitted in any form or by any means, including photocopying, recording, or other electronic or mechanical methods, without the prior written permission of the publisher, except in the case of brief quotations embodied in critical reviews and certain other non-commercial uses permitted by copyright law. For permission requests, write to Miklos A. Nagy at nagy@bookbrokers.ca.