Determining the value of your business is the key issue. If you operate as a truly independent planner there will be no trails or plat­form rebates to include in the goodwill component. Within the traditional financial planning market­place such commissions have been important in determining the value of a business.

So if there are no ongoing commissions to plump up the value of your enterprise, what are the core assets that you will be selling as a going concern?

There are all the obvious assets such as prem­ises, plant and equipment. But, just as importantly, are the other components unique to a well operated fee-for-service practice that will become more sought-after as the market transitions from its cur­rent sales driven base to that of a true profession:

• The first is the value of your client base. This will be influenced by how you recruit and retain clients, your fee structures and the longevity of your relationships with clients. Retention of clients over a long term is obviously essential. You will need to be able to demonstrate client satisfaction and high levels of retention to any potential purchaser.

• Fee structures tend to be moving away from the traditional fee per hour of service inherited from the medical and legal professions. Fee-for-service planners do still operate on an hourly billing basis but others are experimenting with annual fees payable in advance for a specified schedule of ongo­ing service. Fees may be scaled on the basis of size and complexity of the client’s needs.

• Being able to demonstrate your retention rates based on a total of fees paid in advance for ongoing service over a number of years (at least five would be ideal) would certainly give interested purchasers an indication of the future viability of the business. You’ll find yourself in an even stronger negotiating position if your figures demonstrate ongoing growth in the area of return business.

• A strong and successful marketing plan that demonstrates the capacity of the practice to renew its client base as current clients age, achieve their goal of financial independence and no longer need ongoing attention.

• Brand and trade names along with the skills, experience and knowledge of key personnel can also be important, provided they will be retained by the new owner. You may be able to add to the sale price of your business by being prepared to stay on in some sort of consultancy capacity so that the value of your brand and reputation can be retained.

One comment on “Selling Up”
  1. Avatar

    My adviser jsut sold his business including my accounts to another advise and left me in the lurch . My super fund invested in a colonial income product, which is now frozen and I am just retired and want my money. but CFS ( who gives money to charity) will not accept my application for release of funds because of hardship. Even though I am 65 and have been told not to work. Have large medical expenses because of my heart condition. So I am m not impressed with this story.

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