The year before you tell anyone
Most of the preparation for an exit can be done before your staff, your clients or a buyer know you are thinking about it.
Most of the preparation for an exit can be done before your staff, your clients or a buyer know you are thinking about it.
The decision to step back usually forms slowly, and for a while it is known only to you and perhaps your partner. Much of the preparation for an exit can be done in that period, so that you have the facts ready when you start talking to other people.
Work out your recurring income by client, the route by which each fee is paid, and the date of each client's last documented review. Calculate how much of the income sits with your ten largest households. Note the age of each client.
Those figures tell you what a buyer will see. They also show you where the work is: clients who have not been reviewed, fees that cannot be evidenced, and income concentrated in a few households.
Start a note for each long-standing client recording what is not on the file: the family history, the reasons for past decisions, the things they told you in confidence, and how they like to be dealt with. Add to it after every review. It is the information the next adviser will need most.
Before you talk to a buyer, know what you need. Ask your accountant and your own financial planner to look at your pension, the tax on a sale, the income you need after you stop, and how the exit fits with your estate planning. Decide roughly when you would like to stop, and whether you want to keep advising part time first.
Gather the documents a buyer will ask for: the company's accounts, your regulatory returns, your complaints log, your professional indemnity schedules, staff contracts, your office lease, and your contracts with platforms and software suppliers. Note anything with a long notice period or a change-of-control clause.
Some of the changes that raise what a firm is worth take years. They also make sense whether you sell or not, so they can start before you have told anybody about your plans.
Decide whether you want to keep seeing some clients, work a few days a week, or stop on a set date. Decide where you will be living, what you will do with your time, and what income you need. Those answers shape the kind of exit you look for. A principal who wants to keep advising two days a week needs a different arrangement from one who wants to stop at the end of a tax year.
Staff and clients notice changes. A principal who suddenly asks for reports they have never asked for, or who starts bringing colleagues into every meeting, will be asked why. Present each change as what it is: better records, better service, a firm that does not depend on one person. All of those are true, and each would improve the firm whether or not you plan to stop.
Keep your own planning documents at home or in a private folder. Hold conversations with buyers away from the office.
Note which members of your team hold knowledge that exists only in their heads: the administrator who knows every provider's process, the paraplanner who knows the larger clients. Make sure that knowledge is written down. Check each person's contract, notice period and pay. A buyer will look at the team, and your team's future is part of what you are deciding.
Before you tell anyone at the firm, it helps to speak to somebody outside it about the options. Securo is one of them. A conversation with Steven Bates, Director of Advisory at Equity & General, is confidential, and it covers how the programme would apply to your firm and what the exit terms would be. You can have it a year or more before you plan to do anything.
If you could not work from tomorrow, your clients, your staff and your family would need a plan that exists already.
Read it
A principal who wants to keep advising part time needs the work arranged around the days they are in. Under Securo the back office runs on the other days.
Read it
Telling a household you have advised for twenty years that you are stepping back needs preparation, a meeting in person, and a plan for who comes next.
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.