Practice principals are so busy helping clients build and protect wealth that they are failing to plan for succession, the 2008 Axa Succession Report has found.
According to Axa, only 15 per cent of practice principals sell their business, while 85 per cent sell their client base.
Furthermore, the report revealed poorly run advisory businesses sell at a 15 to 20 per cent discount to well run practices.
Those with profitability below the industry average of 20 per cent in a bull market would struggle to realise their full value in a bear market, the report notes.
Steven Davidson, head of Axa’s acquisitions and succession team, says principals are not focussed on their own retirement goals, despite one in two considering exiting the industry in the next five years.
“Our experience shows that without a succession plan in place, a practice principal may not realise the full potential of the business they’ve worked so hard to build,” he says.
“This means they may not achieve a financial outcome that secures their personal goals beyond work.”
Regulation1
E&P sees Dixon in rearview mirror while advisers foot the bill
The parent company of Dixon Advisory, E&P Financial Group, has told the market its legacy issues are behind it, while preaching its core values of putting clients first and acting with integrity. Meanwhile, former Dixon clients are left on their own to fight for compensation and advisers and licensees are left to foot the bill. Simon Hoyle and Chris Dastoor write it’s par for the course for a flawed scheme design and a “diabolical” funding model.
Chris Dastoor and Simon HoyleAugust 29, 2024
