TRANSITION TALK

Preparing for the Next Tranche in Your Succession Plan

Posted by Kem Taylor on Dec 4, 2023 9:30:00 AM

Blog Banner Refresh - Preparing for the Next Tranche in Your Succession Plan

Your firm’s succession plan is designed to gradually transition ownership, leadership, and growth responsibilities to the next generation of advisors. The goal is sustainability of the firm, and it is accomplished through a plan that coordinates the changing roles of the founder(s) and the successor team over many years. 

Selling equity in the business in a series of steps or “Tranches” gives both the founder and the next generation of owners the time to wisely manage the transition and to prepare for the changes to come. The transfer of ownership from the founders (G1s), to the second and third generation of owners (G2s and G3s), starts with Tranche 1. Tranche 1 is usually a sale of 10% to 20% of ownership to the next generation. Tranche 1 is often called the incubator stage and allows for all parties to test the waters and to prepare the business structure for the journey ahead.

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Topics: Succession Planning, Business Growth, Next Generation, Building Your Team

Building the Right Team to Support Your Business Priorities

Posted by FP Transitions on Dec 4, 2023 9:00:00 AM

Blog Banner - Building the Right Team to Support Your Business Priorities

One of the most difficult challenges for independent advisory businesses is finding and retaining the professionals they need to service a growing client base and perpetuate sustainability. The talent pool is extremely competitive, especially in the financial services industry. The value of a strong team and integrated business is ever increasing, and the number of new advisors coming into the profession is still relatively low. To be successful in building the right team, you’ll need to be strategic in your efforts and focus on the people that best align with your business priorities and your plans for growth.

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Topics: Compensation, Organizational Structure, Business Growth, Next Generation, Talent Recruitment, Sustainability, Wealth Management, Business Operations

Mergers - A Nontraditional Growth & Acquisition Strategy

Posted by FP Transitions on Nov 6, 2023 9:00:00 AM

Blog Banner Refresh Mergers - A Nontraditional Growth &  Acquisition  Strategy (1)

Mergers & Acquisitions – everyone’s favorite topic. Understandably so when one of the fastest ways to grow is to acquire and as such, add exponentially more clients (and assets) to your business in one fell swoop.

But what about mergers? Mergers are often lumped in with conversations and statistics about acquisitions, but their role and effect on an advisor’s future is much different than an outright sale or purchase. In our book, “Buying, Selling, and Valuing Practices – The M&A Guide,” FP Transitions’ president, David Grau Sr., JD, clarifies that mergers are, legally speaking, “the joining together of previously separate companies into a single entity.” Unlike an acquisition or sale, a merger means that some or all of the owners of the previously separate companies become owners of the post-merger entity. 

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Topics: Selling Your Practice, Acquisition, Business Growth, M&A, Buying & Selling, Mergers

The Three Pillars of a Successful Advisory Business

Posted by David Grau Sr., JD on Nov 1, 2023 9:15:00 AM

Blog Header Refresh - The Three Pillars of a Successful Advisory Business

In my work in years past, I became a professional traveler. I spent a lot of time in airports, and I got to talk to many of the pilots. Airline pilots are adventurous souls who enjoy finding ways to go faster, fly higher, and see things from a level that others cannot. They are also very methodical and go about everything with a checklist mentality, a clear purpose, and as much knowledge on the subject matter as they can muster. I find a lot of our entrepreneurial advisors to be cut from the same cloth. The goal of building something bigger, stronger, and better, helping clients better understand the financial world, and then sharing what they’ve built with others is woven into the very fabric of their being. Entrepreneurs like to improve and grow, and they like to do things right.

Growth, of course, can mean many things. You might want to grow your top line revenue and assets under management. Maybe you’re looking to hire and build your team in order to improve the client experience. Perhaps you want to acquire a practice, or two, to quickly grow revenue, assets, the client base, and your own income. But, just like a pilot who wants to go faster and fly higher, eventually you’re going to need a larger plane, a stronger engine and airframe, even additional skills that maybe you don’t currently have–or don’t necessarily have a passion for developing.

Over time, we’ve seen that independent advisors don’t naturally build large, profitable, sustainable businesses. The ambition might be there, and recurring, fee-based revenue certainly helps the cause, but the skill sets that prompt most independent advisors  to hang out their own shingle and start gathering clients who trust you with their financial goals and assets are different than what it takes to run an organization of professionals and create scale. For these reasons and others, this is still more an industry of book builders than it is of business builders.

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Topics: Compensation, Succession Planning, Organizational Structure, Business Growth, Entity Structure, Sustainability, Building Your Team

Purpose, Perspective, Premise — the Three Ps of Business Valuation

Posted by FP Transitions on Nov 1, 2023 9:00:00 AM

Banner Blog - Purpose, Perspective, Premise — the Three Ps of Business Valuation.

Purpose, perspective, and premise are the foundations of business value. With these three key aspects we can weigh an incredible amount of detail and data to determine the most accurate value of the business–for any circumstance. The more accurate the value, the better the outcome of your situation, and the better your ability to plan ahead for future growth and higher profits.

Everything starts with “why.” What is the purpose for the valuation? As we like to say, “value is in the eye of the beholder,” and purpose allows us to pinpoint that perspective to know what makes a business valuable to them. And when we drill down into situational specifics and the nuances of perspective, we can understand the future-state of the business and the premise of the valuation to fine tune its accuracy.

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Topics: Succession Planning, Business Growth, Business Value, Benchmarking, Valuation & Appraisal

Business Insights Solving for Growth & Capacity Constraints

Posted by FP Transitions on Oct 3, 2023 9:00:00 AM

Blog Header - Business Insights Solving for Growth  & Capacity Constraints

Sparking that next phase of growth might be harder than expected. For firms moving from sole proprietor to a practice, growth may come easy – but only to a certain point. When a plateau hits, where should advisors look to dig in and overcome? Benchmarking, alongside a deep understanding of business growth and value drivers, is where firms can stand apart from the pack.

If you are ready to grow your financial advisory business and wondering, “Why haven’t I grown faster?” this may be the blog post for you.

Read on for our best tips on diagnosing and overcoming growth inhibitors.  

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Topics: Business Growth, Building Your Team, Client Relationships, Business Operations, Key Insights

Top 10 Drivers of Business Value

Posted by FP Transitions on Sep 6, 2023 8:00:00 AM

Blog Header - Top 10 Drivers of Business Value (1)

The value of your practice is determined by many factors, some obvious, and some not so obvious. And the degree to which some aspects impact your value more largely depends on the reason you’re valuing the business in the first place. 

Whether you’re considering acquisition, onboarding new talent–or new owners–, monitoring annual growth, or getting ready to sell, these ten factors have the most significant impact on the value of your business. Focus in these areas can make a major difference in your book’s sustainability and its eventual purchase price when transition time arrives.

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Topics: Business Growth, Business Value, Buying & Selling, Sustainability, Benchmarking, Valuation & Appraisal

Defining Your Enterprise: What Are You Building?

Posted by David Grau Sr., JD on Jun 20, 2023 10:30:00 AM

Blog - Defining Your Enterprise What are you building (Refresh Banner)

For our clients, the courses of action may differ, but growth is the number one priority. The goal could be to grow and then sell it to a third party for maximum value. Alternatively, the aim could be to create a sustainable enterprise capable of supporting a gradual transfer of ownership, leadership, and responsibility to an internal successor. 

Many advisors arrive on our doorstep using terms like “silo” and “ensemble” to describe to us what they believe they have built. However, these terms merely describe the organizational structure, which is just one facet of the strength of an independent advisory enterprise. These terms are not sufficient for diagnosing ALL structural elements needed to support a sustainable, profitable, valuable enterprise in this highly-regulated and sometimes complex industry. 

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Topics: Business Growth, Sustainability, Enterprise

Solutions to the Advisor Marketing Yo-Yo Effect

Posted by FP Transitions on Jun 19, 2023 10:00:00 AM

JUNE BLOG - BANNER - SOLUTIONS TO THE ADVISOR MARKETING YO-YO EFFECT

End the Cycle: How to Make Marketing a Constant Business Generator

Marketing powers growth, which is why it’s a priority when we’re in need of more business. But over time, with great marketing, business starts booming. That’s when many advisory firms begin to pivot to client service and satisfaction, letting the lead generation campaigns run their course. When the funnel starts to dry up, we dig back into early-stage marketing on social media, email campaigns, more lunch meetings – only to hit pause once a few more clients trickle in. Enter the vicious cycle of the start-and-stop campaigns. We get it, you cannot do it all.

But what if I told you there was a way? Would you be interested? We’re breaking down the challenges and matching you with immediate solutions. Let’s go!

CHALLENGE #1: In the Moment Decisions

Something triggers a renewed marketing focus. It could be anything, but more commonly this can come from an increase in capacity (new team members, better technology, clients on target and requiring less focus) or it could be due to a need for more revenue (profit margins are down, loss of a long-time client, more clients entering retirement). Whatever the source, you start looking for ways to boost revenue.

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Topics: Education, Business Growth, Business Operations, marketing

Elements of A Winning Recruitment Strategy

Posted by FP Transitions on Jun 8, 2023 12:00:00 PM

 

Blog - Header Elements of a Winning Recruitment Strategy-1

Whether you’re looking for seasoned talent or up-and-coming professionals to fill out your team, a winning recruitment strategy is built with intention. It's not just about the role you need to fill, but also about identifying the type of person who best aligns with your business’s culture and future growth goals.

What is the reason for adding this person to the team? Is it simply a matter of capacity? Or are there some other opportunities you can seize in the process? Recruiting the right person can also address your goals to:

-    Expand your service offerings
-    Diversify your client base
-    Create improved operational efficiencies
-    Secure continuity of client service
-    Prepare for succession of business ownership

Understanding which of these align with your existing business plan will help you to tailor role descriptions and find the very best person. Setting the table for success requires vocalizing the right words, expectations and opportunities to your new hire at the outset. Additionally, this focus will help you to communicate what you can offer to attract your ideal candidate.

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Topics: Compensation, Business Growth, Culture, Talent Recruitment, Building Your Team, Equity Pathways