As the average UK financial adviser nears their mid-fifties, industry members have argued that it is important to start succession proofing a business early.
Speaking at FTAdviser’s Financial Advice Forum last month (September 22), Fairstone managing director Anna Pollins, Rimbal ValidPath chief executive officer Angus MacNee and The Exit Partnership head of strategic exits Brian Hill, discussed some of the the exit options available for advisers and which provide the best outcomes for a firm and its clients.
Pollins said it was important to approach the succession strategy in the same way many advisers help clients prepare for decumulation.
“It depends what we mean by outcome. You don't talk to clients about retirement planning when they're 65, you talk to them when they're in accumulation, and it's really the same for your business.
“The best time to start planning a sale is when you don't need to, and it's really thinking about what you want from the business in the first place. What do you want for that business longer term? If you're not the principal shareholders, are you all in agreement on that?”
She explained that different things will be important to firms.
For some it could be the staff, for others the clients, while for others it could be around the independence of the advice given or the products.
“I can't really answer what's the best outcome until I speak to a firm,” she said. “What's important to them? Is a physical location still important to you in your local town or are you quite relaxed about that? All of those things really need to be taken into account.”
Likewise, Hill, who previously worked as an IFA, said he wished he knew more about the options available to him before he sold his business.
“My experience is I was an IFA and I got my business in such a way that I was able to run it from Lake Garda initially and fly back occasionally to see clients such as for one week a month for six or seven months a year so I had the ideal lifestyle,” he said.
However, he said when he came back, he was spammed by brokers and called by firms to ask if he was interested in selling.
“Eventually, they wore me down and I did sell back in 2020,” he said. “But I was so disenfranchised with the whole brokers’ experience and the conflicts of interest which I can only describe as pre RDR, at its best.”
Hill explained that he decided to join the Exit Partnership to help other people to exit properly and at the right time.
Exit options in place
Discussing the exit strategies available to advisers, Hill said there are essentially two ways an individual can exit, either an internal exit or an external exit.
