If you want to sell your financial advisory business, treat it like a real business and it will reward you in the long run, advised Stuart Silverman, president of Bluespring Wealth Partners.
Several steps should be taken to make sure a firm is ready for sale, in the same way a homeowner improves a home before selling it, Silverman said in an interview.
Bluespring Wealth Partners, an Austin, Texas-based subsidiary of Kestra Holdings, focuses on acquiring and servicing wealth management firms.
Valuations at advisory firms are higher now than ever before, prompting owners—many of whom are approaching retirement age—to think about selling their firms. It is a great time to sell, according to Silverman, but there are a number of things acquirers look at, and which advisors should take heed of, before signing on the bottom line.
To be worth an optimum amount, a firm should have a system in place for conducting business so that work among advisors is consistent and it should have a distinct culture and brand, Silverman said.
“Financial plans are customized for each client, but the procedures should be the same,” he noted.
In a similar vein, members of the practice should work as a team.
“You do not want the advisors to operate in separate silos, and you do not want a business that will come to a halt if something happens to the owner,” Silverman said.
In addition, he added, an advisory practice is more valuable when both advisors and clients span the age spectrum.
“Clients tend to be a reflection in age of the advisors,” Silverman said. “But if the advisors and clients are all older, the business is not going to be worth as much as it would be if there were older, middle aged and younger people involved.”