Selling a firm for the highest value usually requires structuring a sale over a period of time so that the owner, staff and clients benefit, says Brad Bueermann, CEO of FP Transitions.
“Advisors work 20 or 30 years to build a business; they do not want it to die,” says John Anderson, managing director of practice management solutions for SEI. They also have clients who are the same age who are planning to live for another 20 or 30 years and the clients want to know who is going to manage their money. “We have to get advisors into a business mindset rather than a financial advisor mindset,” he said.
The lack of transition planning at advisory firms is a problem for the entire financial planning industry, says David DeVoe, founder of DeVoe & Company in San Francisco, which helps wealth management firms optimize their business decisions.
“It is better to put a plan for continuity and succession in place, whether you are 75 or 31,” DeVoe says. “More clients are asking what happens to them if something happens to you. It shows the clients you are thinking of them if you have done the planning.”