TRANSITION TALK

Ongoing developments with COVID-19 have prompted a number of advisors to contact us and make sure their death and disability continuity plans are up to date. It’s worth noting that only about 30% of advisors have any type of formal, written death and disability agreement in place. That leaves 70% with little to no protection for their business and clients.

What is Continuity Planning?

Business Continuity Planning is required by most regulatory organizations in the financial services industry. The common objective is preserving client service and asset management continuity in the event of natural disaster, national emergency, or exit of the licensed principal. Death or disability agreements provide a contingency plan that ensures a seamless transfer of control and responsibility for the business in the event of an owner’s unplanned and abrupt departure.

In the wake of COVID-19, we’ve seen many of these operational contingencies enacted by advisory firms nationwide, and that the preparation for a sudden exit is equally as crucial. Highly transmittable and difficult to predict respiratory viruses aside, you never know when an unexpected event will prevent you from performing your role as owner and advisor.

I rarely meet a financial advisor who doesn’t immediately mention that they want to buy a practice. It seems to be every advisor’s goal. Of course it is. And in my eight years in the industry, I have seen why.

One of the fastest ways for a firm to grow is to acquire another book of business. However, the process is more nuanced and competitive than most advisors seem to think. Most assume they will figure it out as they go along. If you take the unguided DIY approach, however, mistakes will be made–perhaps big ones–and you’re likely to leave money on the table. 

Like every aspect of business ownership, acquiring a book of business takes advanced consideration and preparation. These are a few steps you should be taking now, prior to developing and executing your acquisition strategy.  

1. Develop Your Buyer Profile

Membership to fptransitions.com is free. We don’t believe there should be a series of hoops to jump through before you can explore the largest open market of M&A opportunities; or even to access our library of business building, acquisition, and succession resources.

Step one to taking advantage of your fptransitions.com membership is to complete your buyer profile. This series of basic questions gives the team at FP Transitions an overview of your company and team so we can best help you find acquisition opportunities that would be a good fit.

Pro tip: FP Transitions uses the information provided in your profile to search our database of 25,000+ advisors to find the right buyers for private sales, continuity partner matching, and successor searches.

The buyer profile is your opportunity to offer information that makes you stand out from your peers. The Practice Description field especially. If you offer a few concise thoughts on what makes your practice unique, you’re already setting yourself apart.

Last week we had a client tell us that since he had implemented a formal continuity plan, his clients have felt more comfortable adding assets to their portfolios now that their tenure with his business is protected. The stability of continuity is an important cornerstone for continued business growth and client retention.

Currently, FINRA requires that member firms have a Business Continuity Plan (BCP) that is written and can be made available upon request. More recently, the SEC has proposed a rule which would make it unlawful to provide advisory services to clients unless the RIA has a written business continuity and transition plan in place.

FP Transitions has been helping financial advisors document, implement, and annually update their formal continuity plans for over a decade. Now we are able to leverage our extensive network of advisors to help connect you to the right continuity partner for your unique business.

Single owner practices without written, actionable continuity plans and identified continuity partners, are at a disadvantage to larger businesses and firms with built-in succession plans.

As the owner and person that has built a trusting relationship with your clients, you know that it is crucial to protect their wealth as well as your business as a whole. The most challenging aspect of developing a continuity plan, however, is finding the right partner. Of course you want to be discerning when it comes to the person who is going to care for the business you’ve built when you no longer can.

Introducing Continuity Partner Matching!