TRANSITION TALK

Ship vs. Liferaft - What Are YOU Building?

Posted by FP Transitions on Dec 6, 2016 9:17:33 AM

Ship vs. Liferaft - What Are You Building - Enity Structure

Picture a bright orange life-raft floating on a dark blue, storm-tossed ocean. In this durable, well-built, small craft sits an independent financial advisor. Our advisor has a paddle for propulsion – the means by which to move the raft to safer or more prosperous waters. Our advisor has the means to collect and store rain water for drinking, and fishing tackle to bring in food for survival – the craft literally is floating on a sea of food and fuel to sustain and propel its lone occupant. Our advisor also has a compass for navigation to guide forward progress along a chosen route. 

In terms of organizational structure, this sole proprietorship model is a common starting point for many advisors. With this model a single advisor is compensated on an “eat-what-you-kill,” basis–the clients are under his or her service; he or she receives 100% of the revenue to pay their own individual expenses, and takes 100% of the profits (if any) that remain.

To its credit, this basic production-based, or advisor-driven, model is extremely adaptable and simple to establish and operate. And while it may work for a single advisor office where there are only business expenses and compensation for one, it should not be mistaken for a building block for larger, more sustainable business models. Unfortunately, it often is.

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Topics: Compensation, Equity, Organizational Structure

[FP WEBCAST] Organizational Structures

Posted by FP Transitions on Feb 29, 2016 1:00:00 PM
When a single advisor with a single book of business reaches a certain level of complexity it makes sense to move it into an entity; an entity with a structure that will support business evolution and growth.

Unfortunately, as businesses evolve from single advisor, single book to a more established entity they tend to move into a structure that leads to value that is attached to individual client books within a business rather than to the business itself. This is because, as practices grow and add more advisors, they are onboarded using revenue splitting agreements keeping the books siloed. And, as Brad Says, “If your books are siloed, you’re not a firm – you’re essentially just roommates sharing paper.”

The key to avoiding this is to set up an organizational structure that is an actual business unit instead of just an accounting conduit.

Our new webcast explores different ensembles, and how an improper organizational structure can be dangerous for the ongoing growth and value of your business. We’ll also discuss structures that will ensure your value is tied to your business as a whole and will promote the longevity and sustainability of your firm.
 
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Topics: Webcasts, Equity, Organizational Structure, Enterprise Strength, Revenue Sharing, Entity Structure

[FP WEBCAST] Enterprise Strength vs. Revenue Strength

Posted by FP Transitions on Nov 11, 2015 1:00:00 PM
Revenue Strength: the cash flow, expenses, and assets of your business.

Enterprise Strength: the infrastructure that supports revenue growth.

Can a business really thrive with just one? In short, no. Each supports the other and together they drive your business to maximum value. In our new webcast, Christine Sjolin takes a look at how enterprise strength and revenue strength differ, and how they work together to open up your choices for future business growth and exit planning.
 

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Topics: Webcasts, Equity, Revenue Strength, Enterprise Strength

[FP WEBCAST] Lifestyle Succession Plan

Posted by FP Transitions on Apr 16, 2015 9:55:00 AM

Where do you want to be in 5 years, 10 years, maybe 15? Many advisors begin the planning process too late. In our lastest FP Webcast, President and Founder, David Grau Sr., talks about how to execute a proper succession plan. From thinking realistically about your time to harnessing second-generation talent, David walks you through the benefits and logistics of starting early.

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Topics: Compensation, Succession Planning, Webcasts, Equity

[FP WEBCAST] Advanced Considerations in Succession & Equity

Posted by FP Transitions on Mar 26, 2015 9:59:00 AM

This webcast features Vice President Eric Leeper, CFA as he leads you on a deep dive into the succession planning process by exploring cash flow modeling and equity compensation as a way to stimulate exponential growth within your company.

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Topics: Compensation, Succession Planning, Webcasts, Equity

Revenue Sharing Vs. Equity: Beware Of 'Eat What You Kill'

Posted by FP Transitions on Jun 3, 2014 2:51:00 PM

"To paraphrase Oscar Wilde, independent advisors who rely on revenue sharing versus equity for compensating junior advisors are aware of price but not value.  If your goal as an independent advisor is to build a valuable and enduring business, then the focus should be on compensation structures that underpin the creation of a team of advisors working together in support of a single enterprise."

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Topics: Equity, Revenue Sharing, FPT in the News

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