Advice makes a difference – practicing what we preach

Financial planners, like many others in the professional services space, are in the business of selling ‘advice’. Advice around how, where, when, why and what decision making is required to accumulate and protect assets at various stages throughout their lives. Often this advice is about assisting clients to avoid making poor decisions and choices. Often, the most critical time for client advice comes at the time of their retirement, when a person needs to clearly assess and manage his or her ability to support their lifestyle into the future as they have no future earning or accumulation opportunity.

Similarly, many of the practice owners I work with find themselves at most need of advice when they embark on the major decision to sell their practice or to establish a succession planning initiative that requires a process to deal with valuation, funding and control.

The reasons for selling a practice are diverse and while for many selling leads into retirement, for others it may be about reducing workload, changing careers, pursuing other interests, or simply the need to realise value to assist with retirement funding. Whatever the reasons, there remains a lot to consider to maximise sale value and find the right party to transact with.

Let’s look at it this way. When benchmarked against the average family home, a financial planning practice is an extremely valuable asset. However, time and time again I see practice owners not preparing well when it is time to sell this valuable asset and many do not seek the critical advice required to maximise the value of the business. Poor preparation, knowledge gaps and lack of experience in selling a complex valuable asset, often equates to disappointing results at the time of sale. It’s not surprising considering most owners will have limited experience in selling a business worth hundreds of thousands or millions of dollars that is an intangible asset. Why would they? They are in the business of selling financial advice.

And yes, I am well aware of the irony.

No one is good at everything. As business professionals, we surround ourselves with many ‘advice’ providers to guide us through unknown, complex or specialised scenarios. We have business advisers, mentors, lawyers, taxation specialists and accountants all at the ready when we need to tap into their expertise. Why is it then that so many financial planners do not seek advice at the time of selling their business? It’s a complex process and most often a new experience for them and the buyer and thus both parties have limited if any experience. Add to this that buyers most often have greater previous transaction experience than sellers and the odds start to stack up against the seller. Surely advice in this situation would be valuable? Particularly advice that can lead to a 10 to 20 percent premium on a sale price!

Why do you think so many practice owners don’t practice what they preach when it comes to seeking advice when selling their business? Be sure to leave a comment below.

Chris Wrightson. Founder and CEO at Centurion Market Makers, the industry experts in the sale, acquisition and management of financial planning firms. If you’re planning on selling your firm in 2017, we’d love you to call us for a confidential discussion, or continue browsing our website for more tips, tools and info on the steps to take when buying or selling your financial planning firm.

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