Who's on Your Exit Planning Team?
DEAR ADVISORS,
Exit planning is one of those things that we all know we need to do! But it’s easy to procrastinate because it’s hard to know where to start. The complexities of succession planning often mean that deals take years to develop, only to end in disaster. That’s why it’s crucial to have the right people on your exit planning team. Investing the time and money to build your team could be the one thing that carries your deal through, at the end of the day. Here is a list of positions to fill on your exit planning team:
Exit Planning Advisor - It is the job of the Exit Planning advisor to help you decide on your exit planning goals, design a road map, orchestrate your exit plan for success. Some advisors try doing this job themselves to save money, and end up paying for it in other ways down the road. Your Exit Planning Advisor facilitates the exchange of information and ideas, but can reduce your costs by increasing the efficiency of each advisor. Instead of advisors proceeding in a disjointed manner, often repeating the work of others, you Exit Planning Advisor coordinates the efforts of all team members. Every advisory firm is unique, so we’re fortunate to have experienced exit planning advisors, like myself, and Laurie Nichols, who are passionate about the success of your succession plan.
Attorney - The attorney we’re looking for here specifically works with financial advisory firms on their legal and compliance needs. They specialize in drafting customized continuity agreements and buy/sell agreements for advisors. They’ve also helped clients work through the issues that arise when those documents weren’t in place. Once this specialized attorney drafts the documents, each partner will have their own, personal attorney review the documents. The best options I’ve found for attorneys in this space are Chris Stanley with Beach Street Legal and Rick Randel with Randel Law.
Tax Professional - One time a prospective client reached out to get my opinion on the deal structure of gifting his firm to his sons. There were a few tax issues I flagged, and recommended that he run these questions by his tax preparer before closing the deal. If you don’t already have your own tax preparer or tax consultant, now’s the time to find one! The best outcome is having a tax preparer you’ve worked with for several years, who understands your financial life. We refer our clients to work with XY Tax Solutions, but most CPAs will also have great insight.
Financial Advisor - It seems odd to think that you may need to hire your own financial advisor when we do this for a living. However, whenever I ask an advisor the sale price they need from their business to successfully retire, most have no idea! Sometimes it’s as simple as taking a few hours to update your plan. But, most of the time, your advisor will provide just as much value and education about things to change in your life and business, as your clients get from you. We’re the only firm in the world (that we’ve been able to find!) that provides financial planning for financial advisors, exclusively! At least consider this option for your significant other, who will need a financial guide if something were to happen to you.
Insurance Professional - The average insurance professional may have access to the types of insurance used to protect the partners and business during a succession plan, but they probably don’t have experience putting these insurance plans in place. During my training in the Certified Exit Planning Advisor program through the Exit Planning Institute, I met Kerry Pulliam, CFP®, ChFC, CEPA, , who helps business owners with this type of insurance every day. Finding an insurance consultant like Kerry, and not just an insurance salesman, is crucial to the success of your exit strategy, and the future of your business, in the event that things don’t go according to plan.
Lender / Investment Banker - The terms of the deal are one of the most sensitive things about any succession plan. I recently met Greg Prokott, who runs Advisor Financing LLC, and consults on deal funding for advisors succession plans, exclusively. Not all advisors need that type of coaching, just like some advisory firm owners elect to self-fund their own succession plan. But if you’re looking for a lender, there are several options, like Oak Street Funding, SkyView Partners, and Live Oak Bank. It’s a good idea to look at each, because they provide different types of loans.
Planning an exit is a multi-disciplinary endeavor. Transferring a business to children (or co-owners or employees), selling to a third party, or assuring business continuity are tasks that exceed the expertise of any one advisor. That’s why we recommend an Exit Planning Team. Some of the people on your team may wear multiple hats. For example, your financial advisor may prepare your taxes, or your exit planning advisor may also do your financial plan. The important thing is filling each role. We’re happy to provide a warm introduction or vet anyone you’re considering adding to your team. Building your exit planning team is one of the first steps to securing the future of your family and your financial advisory firm.
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 with our team today or get to know me on my bio here!