Selling an independent financial advisor practice is a thing that is easier said than done, and relatively few financial advisors choose to go the route of selling the practice outright for 100% of its value. There are other, more profitable options out there for advisors, particularly the models that allow the retiring advisor to retain some ownership and oversight, and therefore, maintain a continuing income over the years.

 

However, selling the practice, if you want to go this route, is extremely possible. In recent years, a number of potential buyers have transformed the market into a seller’s market, resulting in an increase in the dollar amount of practice valuation and purchase price, and making it very easy for sellers to find a buyer if they want one. People are conducting hundreds of searches per month on Google for search terms oriented around “buying a book of business,” while as of 2016, there are zero monthly searches for terms related to selling a practice. Online estimates state that there are as many as 50 potential buyers for every seller of financial advisor practices, giving sellers a huge array of buyers to evaluate and choose from.

Pros

  • Selling the practice gives you a “clean break” from your practice and truly allows you to walk away and retire without carrying any more of the weight of your practice.
  • Current market conditions afford you a good opportunity to acquire a competitive purchase price for your practice.
  • Financing options are more numerous than before, giving you a good chance that you’ll be able to get paid upfront rather than having to finance the deal yourself.
  • Selling your practice is the fastest exit strategy available.
  • Compared to closing the practice, selling the practice gives you a much better sum of money to retire on and pass on to your family after you’re gone.

Cons

  • Selling your practice is one of the methods that contribute the least to making a smooth emotional transition to retirement. For many advisors, the emotional aspect of severing client relationships is one of the hardest parts of retiring, and other retirement models take this more fully into account.
  • Selling a practice is a thing you’ll do only once in your career, and navigating all the aspects of the deal can be difficult, time-consuming, and highly demanding of resources like staff and money.
  • Many advisors feel an inherent resistance to offering their entire business for sale to someone who hasn’t worked to build the relationships with these clients.
  • Finding a buyer who is a good match requires the alignment of many factors, from culture to fee schedules to geography, and this isn’t always possible to find, even with the multitude of buyers currently in the market.

Next article: Grow your Business

advisorRETIRE is a program that allows retiring independent financial advisors to transition into retirement with a viable and flexible succession plan. Our turnkey approach is customizable to your needs, your timeline, and your goals. Find out more about the different options we offer, and sign up today.

 

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  • SEAMLESS INTEGRATION OF CLIENTS

    We apply our proprietary service meeting processes to ensure a smooth client transition.