What your network’s succession route offers
Who is buying, how the price is set, what happens if you decline, what your clients experience, and the timing of a network’s internal succession route.
Who is buying, how the price is set, what happens if you decline, what your clients experience, and the timing of a network’s internal succession route.
If you are an appointed representative thinking about retirement, your network may offer an internal succession route, and it is likely to be the most convenient option. Check its value as well as its convenience.
Establish the following five things before you accept it.
The buyer may be the network itself, an associated firm or another member. Each has different motives and different funding. The buyer determines who your clients deal with in three years, so ask.
Check whether the price comes from a formula in the scheme rules or from an open-market valuation. A formula is predictable. One side sets it. Ask when it was last revised and by whom.
This is the most important of the five. If declining the internal route means your clients cannot be novated elsewhere without a penalty, or your permissions lapse in a way that complicates a third-party sale, the internal route is your only option.
Read the relevant clause in full.
Ask who will advise them, on what service, at what cost and on which platform. Any change happens at the same time as they lose you as their adviser.
Internal routes run to the network’s timetable. If the mechanism only operates at certain points, or needs notice you have not given, the network’s process sets your retirement date.
Find out what the alternative is before you accept. An adviser who knows what the firm would fetch on the open market, and knows their clients could be novated elsewhere, negotiates from a stronger position, even if they then take the internal route.
You can use our valuation tool for this without contacting us.
The three meetings of a handover year and what each one is for.
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The premium is the insurance market’s price for the risk in your back book. It also shows each year how a buyer is likely to view your firm.
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Questions to ask about each buyer’s plans for your clients, alongside the price.
Read itSteven Bates, Director of Advisory at Equity & General, takes the first call with every adviser. Ring him on 020 8396 0486 or send a short note about your firm.