Tips for consultants who retire and sell businesses

If you are a financial adviser or financial planner planning to retire in the next ten years, then you are not alone. According to data from the Council of Certified Financial Planners, about 47% of its certified members are over 50 years old, which means that many of these consultants may plan to retire in the next 20 years.

So what does this mean to you? It may be time to start your own retirement or start thinking about your business succession, so you can take advantage of other planners looking for buyers. Since multiple consultants are seeking to sell at the same time, the longer you wait, the harder it will be to leave when you want to leave. Starting the succession planning process early can also increase your chances of finding a qualified buyer.

Unlike the pizzeria owner, you cannot start the process of sales and consulting practice and complete the transaction in a short time. Due to your responsibilities to customers and the nature of your financial planning business, there are several steps to prepare, execute, and complete a sale. Hope you have established a lasting relationship with your customers based on trust and historical performance, so it may take years to make a well-planned sale.

If the client doesn’t trust the planner who will take over, or thinks that their performance is not as good as you used to, they are likely to leave. If they feel that you are not fully prepared for their retirement, they may even leave before you sell, which will reduce the value of your practice. Clients don’t want to be caught off guard in financial management.

To prevent this from happening, here are some tips to help you plan to leave the clinic in advance.

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Own retirement plan

Before you start looking for someone to buy your business, you first need to decide exactly what you want after retirement. This is a topic you have been discussing for your clients, but you may rarely sit down and evaluate your retirement life. Do you want to play golf all day? part time job? travel? What does your spouse want to do?

Knowing the answers to these questions will help you decide which type of sales to arrange for your practice. It will also show your customers that you have considered all aspects of this transition, not just on a whim.

Ways to market your approach

There are two main types of sales, internal and external. Internal sales are aimed at family members or employees. External sales occur when you sell your business to another company or individual with whom you have no personal or professional ties. Let’s take a closer look at each of these options to better understand how they work.

For internal sales, you usually have to start planning earlier than external sales. Since the new owner is likely to be a junior partner, you need to train them to run the business and ensure that they can also handle all parts of the financial planning process.

You also need to make sure that the company has the proper processes to run without you. Many business owners keep everything in their heads-keep your business processes on paper. You also need to make sure that your customers are satisfied with the person who is about to become the new owner.

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Internal sales are usually funded by consultants who own the business and implemented over a long period of time. You can even structure it as a form of pension by receiving commercial loan payments during retirement. Usually, you will sell the business based on the multiple of the earnings, because the successor owner will keep all the existing infrastructure.

In external sales, there are many ways to handle transactions. You can immediately transfer your books to sell your business as you supervise the six to twelve month transition. You can also sell some books, you only transfer some customers and keep some for your practice. If you and the buyer are in the same broker-dealer network, if you are trying to transition to understand how it works, or if you want to maintain some customers through partial retirement, this is usually the case. The final option is to merge with another company. You can stay and get a salary, but your company will be attracted by another approach, and others will take over all aspects of business management.

External sales are usually priced based on revenue estimates for the past 12 months, because you are likely to sell them to someone who already has an existing business. These sales usually have a down payment, which is then paid off after a few years, depending on the option you choose. Other payment structures include lump-sum payments, seller financing bills and even surplus arrangements.

Find the right buyer

If you plan to sell internally, you need to decide which employee is ready and able to take over, make sure they want to buy this practice, and then reach an agreement on the price tag. If this person has not yet joined your team, you should start thinking about hiring them so that you have time to prepare for their future role.

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Finding external buyers may require more research. You can hire a commercial broker to manage this process for you, or you can contact other local planners that may be of interest. Then, over time, meet with them and make sure they are suitable for your client in terms of personality and investment style. In the case of a merger, also consider whether this potential new owner is compatible with your current employees and business processes.

Finally, negotiate a deal, fill out the required paperwork, and officially start the process of selling your clinic.

Management transition

One of the key components of a smooth transition is continuous communication with all relevant parties, including customers, your employees, and new owners. If you are transitioning within a few years, it helps to write the acquisition strategy on paper and open it for review and revision when necessary. As things progress or there are any major changes, be sure to update this strategy. When something does not match your original plan, people need to know where they stand and how they will be cared for. The more you communicate, the risk of customers leaving and related issues will be significantly reduced.

Bottom line

It is irresponsible to continue the practice of financial planning after retirement without a plan. First sit down and decide what you want from retirement, and then find a succession plan that makes your dream retirement life a reality, while appropriately ensuring that you provide quality services and advice to your customers after you leave.


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