TRANSITION TALK

Mid-Year Market Update - Key Insights

Posted by FP Transitions on Aug 9, 2021 3:07:11 PM

Last month our M&A Director James Fisher, JD and CEO Brad Bueermann delivered our 2021 Mid-Year Market Update and explored marketplace activity for the first half of 2021.

We all know that 2020 was a truly unique year on all fronts. The financial services M&A marketplace was no exception (as we discussed back in January).  The effects of 2020 have carried over into 2021 and have impacted transactions in some unexpected ways–and have potentially changed deal term norms from here on out.

Our full Mid-Year Market Update presentation was close to 60 minutes, including a live Q&A session, and covered up-to-date transaction data and trends, realities of today's industry, qualities of successful buyers, and common acquisition misconceptions.

To focus in on some of the most important highlights from the session, Craig Strauser sat down with James Fisher, JD to discuss them further. Watch their chat below.

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Topics: Compensation, Business Growth, Sustainability, Enterprise

The Fine Art of Enterprise Consulting

Posted by David Grau Sr., JD on Jul 26, 2021 5:10:17 PM

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FP Transitions conducted most of its work by phone and video conferencing long before the virus made this approach commonplace. So, it is with a great deal of humility, and a little courage, that we admit that even after two decades of honing our craft, we’re still perfecting how to provide consulting solutions in this fashion, to this unique profession.

Providing advice over a phone line or a computer isn’t all that difficult; what’s harder is gathering enough high-quality and relevant information to diagnose the problem or problems and then to provide customized, accurate and practical solutions. To do all that, we’ve had to learn how to listen at a professional level–and we had to design those systems and processes almost from scratch.

The mistake that almost all consultants and coaches in this industry make is to try to get an advisor on board as quickly as possible so that, as information providers, they don’t give away too much up front or spend too long trying to help only to be passed over as the service provider. The process usually comes down to 30 minutes of discussion and then a quick diagnosis that best fits what the consultant or coach has to sell, rather than what the client truly needs.

We don’t do it that way.

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Topics: Compensation, Business Growth, Sustainability, Enterprise

The Case Against Revenue Splits [Article]

Posted by FP Transitions on Oct 28, 2020 6:16:00 AM

With all of the modern tools for practice valuations and equity management solutions available, some financial advisors still choose to use revenue splits, or a revenue-sharing arrangement, as a makeshift succession plan. For a practice owner, this can be a poor and shortsighted business decision for several reasons, including:

  • Unfavorable tax implications.
  • Potential asset and client disputes.
  • Reduced business value.
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Topics: Compensation, Succession Planning, Enterprise Strength, Cash Flow, Sustainability

Benefits of Synthetic Equity for Next-Generation Professionals

Posted by Stuart Smith, JD on Sep 30, 2020 4:56:11 PM

Benefits of Synthetic Equity for Next-Generation Advisors

The term “synthetic equity” refers to a set of compensation tools that is commonly used to provide key employees some of the economic benefits of ownership without actual stock changing hands. While existing owners may benefit from synthetic equity by capitalizing on employee performance without relinquishing ownership, there are key benefits to next-generation advisors, too.

Reduced Financial Risk

One of the most beneficial aspects of synthetic equity for a next-generation advisor is that it does not require a financial investment in the firm. As a younger professional, you may already be juggling the financial obligations of a new family, a recent home purchase, or student loans, and you may not be interested in taking on the added burden of ownership buy-in–yet.

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Topics: Compensation, Succession Planning, Next Generation, Sustainability, Building Your Team

Remodeling Cash Flow [Article]

Posted by FP Transitions on Sep 10, 2020 10:23:33 AM

There are two ways to make money from a financial services business: wages and profit distributions. But, there are four ways to build wealth from the same model: 

  1. Wages (including bonuses)
  2. Profit distributions
  3. Equity income selling equity
  4. Equity value, or stock appreciation

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Topics: Compensation, Succession Planning, Enterprise Strength, Cash Flow, Sustainability

The Four Greatest Opportunities for Financial Advisors

Posted by FP Transitions on Jul 16, 2020 7:27:21 AM

Four Opportunities for Financial Advisors

Today’s Independent financial advisors face an endless array of challenges and opportunities. Identifying challenges before they arise is key for finding solutions and developing strategies for tackling the issues that present the greatest opportunities for improvement and growth.

The four biggest opportunities are:

  • Balancing Growth and Profitability
  • Recruiting and Retaining Talent
  • Creating Business Sustainability
  • Growth Through Mergers and Acquisitions

Balancing Growth and Profitability

Growth and profitability are inextricably linked and balancing the two within a single practice is the difference between building a one-generational practice and a multi-generational, sustainable enterprise.

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Topics: Compensation, Succession Planning, Acquisition, Business Growth, Mergers, Talent Recruitment, Sustainability, Enterprise

Structuring Ownership Compensation

Posted by Stuart Smith, JD on Mar 11, 2020 8:52:42 AM

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Professionals working in the independent financial services industry tend to organize their business the same way as other professional service providers. Whether a dentist, lawyer, or wealth advisor, chances are that the firm owner is both a full-time employee and an active manager of the business as well as a shareholder. We are often asked in our consulting work about this dual role; shareholder and employee, and the interplay between them, particularly as it relates to compensation strategies. For example, should employees be rewarded with stock, or the opportunity to buy stock for achieving certain targets? Or, now that I am an owner, shouldn’t I get a raise?  

There are no simple answers to these questions, but context should help to understand the thought process required to make informed decisions when these issues inevitably arise.

Salary vs. Profit Share

At a first level, ownership and pay are distinct concepts with unique rules, purposes, benefits and risks. These concepts represent the division between the return an investor receives on the capital put at risk and the reward received by an employee for the work that is performed. This division should be simple, self-evident and unbending, but the reality in a small business is often far different. The smaller the company, the harder it is to maintain a distinction between ownership returns and compensation. In the most basic model, a one owner company, the black and white lines dividing a return on investment and wages for work often disappear completely.

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Topics: Compensation, Business Growth, Enterprise

Targeted Growth Solutions for Financial Advisors - FREE eBook Download

Posted by FP Transitions on Nov 13, 2019 1:17:01 PM

Today’s independent financial advisors face an endless array of opportunities (and challenges). The key is to identify impediments before they arise and to develop strategies for tackling the issues that present the greatest opportunities for improvement and growth.

There are four main challenges essential to the success of your business:

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Topics: Compensation, Succession Planning, Acquisition, Business Growth, M&A, Next Generation, Talent Recruitment, Enterprise

NEW Webcast - Advanced Strategies for Growth & Profitability

Posted by FP Transitions on Jul 24, 2019 10:00:00 AM

The growth and profitability of your business are interconnected. Top-line revenue growth is essential, but it is no good without bottom-line profitability.

Balancing growth and profitability comes down to compensation structure and the equity pathways created for owners of the business. The profits generated through properly structured equity pathways are a catalyst for growth and the means to accomplish long-term strategic objectives including recruiting new talent, internal succession, and acquisition.

In our newest webcast, VP of Research and Analysis Eric Leeper, CFA®, discusses compensation solutions for businesses in varying stages of growth and how these strategies can boost both top-line growth and bottom-line profitability. 

View webcast clip below and click here to watch the full video.

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Topics: Compensation, Succession Planning, Equity Pathways, Enterprise

NEW Webcast - Issues Advisors Face

Posted by FP Transitions on Jun 17, 2019 9:12:00 AM

Independent financial advisors face an almost overwhelming set of challenges, but with challenges come opportunities. Many of these challenges fall into areas of:

  • Mergers & Acquisitions
  • Growth & Profitability
  • Talent Retention
  • Succession Planning

These opportunities and challenges are often interrelated. Tackling one challenge often helps solve another, thereby strengthening your business in other ways. A successful acquisition is supported by a strong enterprise that is capable of handling exponential growth, and building a strong enterprise requires the incorporation of next generation talent. Retaining and nurturing next generation talent is made possible with the proper compensation systems, and maintaining an effective compensation system demands business profitability. Bottom-line profitability increases when it is properly balanced with top-line growth. Finally, to bring it all together, growth is supported by building a strong, sustainable enterprise.

In this new webcast, President and Founder David Grau Sr., JD, discusses the top challenges and opportunities of the profession and how they can be addressed using an end-to-end, integrated strategy.

View webcast clip below and click here to watch the full video.

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Topics: Compensation, Succession Planning, M&A, Talent Recruitment, Equity Pathways, Enterprise

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