As we said last time, when it comes to selling your financial advisory practice, timing is crucial. But waiting for the perfect time to sell your practice may prove costly. We are experiencing market volatility not seen in over a decade, and you might be thinking about what’s happening to the value of your largest asset: your business. While the continuing bull market is currently still roaring, reversion to the mean is inevitable and by then it might be too late.
If you haven’t already done so, now is the time to safeguard the value of your practice so you can remain on course for your own retirement. Part II of our series lists our next 5 reasons to sell your practice now – if you missed Part 1, read it here.
6. You Need to Hustle Just When You Want to Slow Down
This one is a direct result of #4 in Part I. In order to simply maintain the value of your practice as clients die and assets dwindle, younger clients and new assets must be added on a regular basis. In other words, you need to be out there selling, proactively getting new clients, and working harder than ever in order to maintain the value of your business. That can be exhausting just at the time when you’re thinking of winding down your practice.
7. Tax Uncertainty
What are the tax implications of selling your practice at its current value compared to one, two, or five years from now? Do you expect your practice to grow or shrink during those years? Will the net value of your practice at the time of sale plus the net cash flows from working additional years exceed the current market value of your practice? How will the expected increases in capital gains tax impact your profit? These are important questions to consider when assessing the appropriate time to monetize your practice.
8. Start Enjoying Your Retirement Now
You’ve spent years building a successful practice and now is the time to sit back and enjoy the fruits of your labor. Relax, play, travel, enjoy! Your friends and clients are doing it and you deserve to, too. Or, if you’re not quite ready to sell your entire book, there is another option: semi-retire. This lifestyle change can create a healthier work/life balance and make work fun again by shedding your least productive clients. We all know that not all clients are created equal – focus on those you enjoy most and let someone else do the work for the rest.
9. The Elusive “Right Fit” Is Closer Than You Think
More than half of financial professional firms are interested in acquiring another practice (and as much as 75% of RIAs), but that doesn’t mean they’re all the right fit for you and your clients. You need to find the level of trust, competence, integrity, respect and understanding that your clients have become accustomed to. Not every seller is the right fit, but some offer more benefits than others. Do they offer the opportunity to choose your own successor? Do they allow you to train and mentor them to truly understand your clients’ needs? Do they share new revenue generated from your existing clients with you? Do they allow you to still work with your favorite clients if you want? Do they have the same values? We encourage you to reach out to Trust Advisory Group to learn more about how we can be just the right fit for you.
10. Don’t Die at Your Desk!
Consider this scenario: Should you become suddenly incapacitated, who has trading or banking authority? Who will run payroll? Who will access your computer systems — and how? Who’s prepared to answer your clients’ questions and reassure them that their assets are still well managed? Staying on auto-pilot increases the risk of having to leave your practice as a result of an emergency. Plan your retirement in the best interest of your clients before something unexpected happens and wipes away any chance at monetizing your practice and taking care of your family or heirs. Take control of the process and start planning your exit strategy now.
About TAG 2.0
Trust Advisory Group’s small TAG 2.0 division has built-in business continuity and succession planning designed to meet advisors where they are today. Whether it’s simply staying compliant in the face of increased regulatory scrutiny, creating a better work/life balance, or planning for full retirement, TAG 2.0 has a program for you.
TAG 2.0 offers advisors 3 levels of engagement:
- The TAG Practice Protection Program™ is a no-obligation Business Continuity Plan that protects your practice at any stage of your career.
- The TAG Semi-Retirement Program™ allows advisors to streamline their practice, continue working with their favorite clients, and participate in any incremental revenue generated.
- The TAG Full Retirement Program™ gives advisors control over their own retirement journey and seamlessly transitions the practice. This option also allows advisors to participate in any incremental revenue generated.
TAG 2.0 is a new take on financial advisory services that combines the best of all worlds: the fresh thinking, creativity and enthusiasm of a start-up division; the friendly, family atmosphere of a small firm, and the security and stability of a 30-year-old institution (TAG Group, Inc.). TAG 2.0 infuses old-world morals and ethics into the next generation of financial advice.