How to Increase the Value of Your Financial Advisory Firm Without Spending a Dime
Dear Advisors,
You’ve spent years building your financial advisory firm but all of it is worth next to nothing without a succession plan. Without an exit plan, your clients, your family, and everything you’ve worked for is at risk. A transition plan provides security for your family and your clients, which increases the value of your business. You don’t have to have the entire transition outlined today. Here are 3 ways to get a transition plan in place without wasting any more time or money.
One-Page Succession Plan - If you’re like me, you want your family to financially benefit from the sale of your financial advisory firm, but they won’t know how to make that business transition happen. The first solution is a one-page succession plan. It lists an individual who would help your family transition your financial advisory firm if something were to happen to you. This person would most likely be another advisor in your state who has met your spouse, and runs a similar financial advisory business model to yours. When I signed my first one-page succession plan, the other advisor needed the same service for their financial advisory firm, so it worked both ways:
I/We, 1st Advisor’s Full Name of 1st Advisor’s Firm Name and 2nd Advisor’s Full Name of 2nd Advisor’s Firm Name accept as our ethical and fiduciary responsibility to provide a succession plan for our clients in the event that I/we are incapacitated by an untimely death or disability.
We have acquainted each other with our clients in general and the systems we use to fulfill our fiduciary duties to our clients. In the event of our death or disability, we have agreed to intervene on each other's behalf.
This agreement will terminate upon written notice from either party involved. (Followed by signatures, the date, and contact information)
Share resources - Sharing could mean anything, from sharing office space to sharing resources like a printer, a break room, or even a part-time staff person. It also decreases expenses for both advisors. Sharing resources is simply taking the One-Page Succession Plan a step further. You aren’t committing to anything, but you’re increasing the value of your financial advisory firm because another advisor sees the way you run your firm. If you find that this is working out well after 1-2 years, switch the One-Page Succession Plan to be with this advisor.
Hire a Younger Advisor - When you reach capacity, hiring a younger advisor has two benefits. Not only do they help with the work load, they can also serve as your succession plan. Once the advisor has been there for 1-2 years, switch the Basic Succession Plan to be with them instead of an outside advisor. When I signed my first agreement like this, my boss told me who they had listed previously, and which other professional alliances could step in to help run certain aspects of the firm until the transition was complete. This really increases the value of your financial advisory practice!
Any of the 3 succession plans above will increase the value of your financial advisory firm by providing security for your clients and your family. Once you’ve taken those first steps, block time on your calendar once a month to work on a written succession plan. More advanced succession planning includes things like letters of intent, buy-sell agreements, and possibly funding with insurance.
Having a transition plan in place is one of your fiduciary duties to your clients. It also secures the future of your family and your business. Why wait when you have 3 easy ways to get a transition plan in place today?
Warm regards,
Brooklyn
P.S.
At Ellevate Advisors, we believe that advisors deserve to retire too. What does that look like for you, your family, and your business? Let’s figure it out together! Click here to schedule an initial phone call today.