There are many facets to selling your financial planning practice. Among the biggest challenges and causes of concern for sellers is finding the right buyer. Factors such as price, compatibility, location, work ethic and common values are some of the considerations that make the task seem daunting to many advisors that are beginning the process of selling their practice. When positioning your firm for sale, here are some things to take into consideration.

Develop Your Priorities

Developing a plan to sell your practice is no different than developing a financial plan for your clients. The process begins with deep contemplation of your goals and objectives. Just as no two financial plans are the same, no two financial planning practices are the same and by having a deep understanding of what you would like to achieve, it is more likely that you will obtain what you want. Developing your priorities begins with asking yourself some of the following questions:
Are you retiring or do you desire to make a fundamental career change (for example, to teach or consult on a full-time basis), to relocate, or to buy a vineyard and disappear?
Is there a medical or personal reason to consider completely exiting the practice? If so, is your goal may be to sell your practice outright, to the highest bidder?
Are you seeking to remain with your advisory practice, as a post-sale employee or consultant?
What client service concerns do you have?

Create an Ideal Buyer Profile

Once you have taken the time to consider your goals and objectives time must be taken to visualize what the “ideal buyer” for your practice looks like. A lot of advisors consider their clients to be friends, and concern for their clients’ well-being is a top priority. Many times maximizing the profit on the sale comes further down the list of their concerns. Creating an “ideal buyer” profile allows you to prioritize what is most important to you, and makes it easier to identify ideal candidates, and structure a better deal. The following questions should be considered:

  • Does the prospective buyer share my commitment to servicing my clients?

  • Does the prospective buyer practice in the same way (i.e. fee based, comprehensive planning)?

  • Does the prospective buyer share my work ethic?

  • Is the prospective buyer able to handle the increased client load?

Identify a Pool of Candidates

Once you have developed your goals and objectives and identified your ideal buyer profile the final step is to identify a pool of candidates. There are many options available to you in this stage including working with your existing broker-dealer, hiring an outside consultant or registering your practice with a financial advisory practice marketplace such as Succession Link. The challenge is to identify candidates that fit your ideal buyer profile while ensuring that your priorities for sale are met.
Selling a financial planning practice is not an easy choice for most advisors. However with a bit of planning and thoughtful consideration for everyone’s best interests (buyer, seller and client), it is possible to structure a fair and equitable deal and achieve a smooth transition of your clients to a new advisor.

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