Succesion Planning
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This document provides an introduction to succession planning for financial advisors. It discusses why having a succession plan is important, noting that the average age of financial advisors is 56 and only 29% have a written plan. It outlines different types of succession, including external sale of a book of business or internal succession by identifying a successor. The goal of succession planning is ensuring client continuity and legacy through transition. The document provides details on assessing business value, deal structures, financing a transition, assessing potential successors, and managing the client transition process.
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Succesion Planning
- 1. Introduction toSUCCESSION PLANNING Protecting and Maximizing What Matters Most to You and Your Clients
- 4. 29% of Independent Advisors have a written succession plan.
- 5. Client Retention with the Right Transition Plan
- 6. 88% for Registered Representatives
- 7. 97% for Fee-Only AdvisorsSource: FP Transitions N.A. Book Sales 2010
- 10. Active Lifestyle
- 11. Business Growth
- 12. Focus on Top Clients
- 13. Target Market
- 14. Retention
- 15. Client stability
- 16. Active Book
- 17. Income
- 20. No Successor
- 21. No Family Member
- 22. Junior Partner
- 24. Sale of Book: whole or partial
- 25. Quick Transition
- 28. Co-habitation
- 30. Lowest Price
- 31. Training
- 33. Transition of culture, service, advice
- 35. Business Legacy
- 36. Jobs and Income for Family
- 37. Service for Client and their heirs
- 38. Service
- 39. Spend more time with Top Clients (Partial Sale)
- 40. Matching Service Model to Yours
- 41. Loyalty to Existing Staff
- 44. What is Your Retirement Age?
- 45. How Long to Transition?
- 47. Revenue (Gross & Recurring)
- 48. Profitability
- 49. Clients
- 50. Retention Rate
- 51. Demographics
- 53. Compliance
- 55. Pending or Future Regulatory Concerns
- 56. Miscellaneous
- 58. Growth History
- 59. Location
- 61. Used with firms under $1MM in revenue
- 62. Different multiples based on recurring & non-recurring revenue
- 63. Typical range: 0.5 – 2.75 x T12
- 65. Firms with $1MM+ in revenue
- 66. Firms that are going to remain “stand alone” firms
- 67. Typical range: 4 - 7 x T12
- 68. Net Present Value/Discounted Cash Flow
- 69. Forecast future cash flows
- 71. Commonly 10%-33% of Purchase Price
- 73. Seller financed
- 74. Tied to client/revenue retention or profitability
- 75. Stock
- 76. Vesting Schedule
- 77. Tied to financials benchmarks
- 78. Compensation
- 79. Pay for services provided post-acquisition
- 81. Asset vs. Stock Sale
- 82. Tax Consequences, liabilities, leases, etc.
- 83. Client Consent vs. Client Notification
- 84. Identify with the Buyer
- 85. Understand the tax ramifications & cash flows
- 88. Local Team
- 89. Multiple options of successor/buyer
- 90. Junior Advisor
- 92. Employees
- 94. Why are they in the business?
- 95. What issues are they passionate about?
- 97. Cash on hand
- 98. Production
- 99. Capabilities
- 100. Business Management
- 103. Character and Values
- 104. Qualifications
- 105. Designations
- 106. Schooling
- 107. Experiences
- 108. Personality Match
- 111. Business Lending
- 112. Management (Business Support) Firm
- 113. Buyer Financed
- 114. Sell to Team
- 115. Broker-Dealer
- 116. Low Interest Loan
- 118. Joint Meetings
- 120. WorkingPlan
- 121. Length of transition
- 122. How Long will you work
- 123. Client Segmentation
- 124. What clients will you continue to work with?
- 125. Service model for transitioned clients
- 127. 2-3 months intensive transition
- 128. 6 months or less client transition
- 130. Practice Buy/Sell
- 131. Transition (Broker-Dealer and RIA)
- 132. Recruiting