Selling Your Financial Advisor Business

According to the CFP Board, 48% of its 86,910 members are over fifty years old. That’s more than forty thousand financial advisors who will be looking to retire in the next two decades. Are you one of them? Have you considered selling your advisory practice?

Selling a financial advisor business is not something that happens overnight. Determining an asking price is only one small element of putting a deal together. Here at Bridgemark Strategies, we can help you with the creation and execution of an effective sales plan. Contact us today for more information.

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When Should You Sell Your Practice?

Timing is everything. Business valuations are based on profitability and growth rate. The best time to sell your practice is when you have the proper amount of time to find a buyer and a smooth transition, which can take two years or longer. Practices that choose to sell too late are more likely to get a reduced price.

Building AUM and Selling Advisory Practices as a Business Model

Retirement is only one of many reasons to sell a financial advisor business. Some advisors specialize in creating growth strategies and actually build and sell more than once. It’s a profitable business model. Ask one of our consultants for advice if that’s the path you want to follow.

A Profitable Market

Over the last 15 years, the amount of money advisors can get for their business has risen astronomically. As recently as 10 years ago, Morgan Stanley was quoted to have increased their deal to pay an advisor up to 100% of trailing 12-month production with 75% being cash and the remainder in equity. Today, these deals at the Wirehouses can top 350% including back end bonuses. For independent advisors, business valuation multiples have also grown from nothing, when an advisor would just retire, up to ten times profits or more.

The Importance of a Plan

Most advisors haven’t spent the time and taken the steps to take advantage of today’s all-time high valuations. In fact, fewer than 20% of advisors have an exit plan. Studies indicate, however, that a long-term strategy for selling your practice implemented years in advance can increase the value of your business, enhance the service you provide to your clients, and dramatically increase money in your pocket.

Maximize Value & Care For Your Clients

If you are within 15 years of winding down or selling your business, Bridgemark Strategies will work with you to make sure your practice is best positioned to maximize its value while providing you the comfort that your clients are being taken care of.

Essential Tips for Selling Your Practice

Our experienced consultants can offer you key insights throughout the sale process. Here are just a few things you should know when selling your financial advisor practice:

Selling a financial advisor business doesn’t necessarily mean you’re retiring. Advisors often step back to develop a lifestyle practice or join the investment committee of the buyer’s firm.

In the past, sellers would get 10 to 30% as a down payment and have to finance the rest on time payments. Today, banks are willing to finance up to 100%, giving the seller a faster payout.

When a deal is structured properly, sellers who have owned their practice more than one year can claim the sales proceeds as capital gains, thus leaving them with lower tax liability.

Buyers will want to see this before closing most sales. Overhead is always a factor in the final decision to buy an advisory practice. A detailed plan to lower it will sweeten the deal.

Buyers are looking for client longevity and assurances that they’ll be able to retain them.

Can they follow through with a succession plan? Even if you’re planning to sever all ties with the practice, it’s still your reputation on the line. You owe it to your clients to qualify any potential buyers before negotiating a deal.

Let’s Get Started

Selling your practice should be done with a plan that is implemented years prior to when you want to exit the business. Start today. Bridgemark Strategies can help you position yourself to get maximum value for your practice when the time comes. Call us today to learn more.