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The Rising Importance of Transition Planning
Tuesday, May 12, 2020
We remain mired in the Covid-19 pandemic.
Amidst one of the worst public health crises and economic downturns in recent memory, financial advisor's have continued to help ensure the financial well-being of their clients. As the crisis continues, however, a growing number of advisor's are starting to turn attention to their own situation and the longer-term impact of Covid-19 on their business. They are beginning to ask the following questions:
What is my plan if I am no longer able to service my clients?
How might this crisis affect my own retirement?
I was planning to sell my business in the next 3-5 years. Does that timing still make sense?
How has this crisis affected the value of my business? What can I do to increase its value?
Do I have the motivation and desire to continue working as an advisor post Covid-19?
One of the most significant strategic challenges facing our industry prior to Covid-19 was the lack of advisor preparedness concerning Succession, Continuity and Exit Planning. We all know the stats. Only a small percentage (approx. 10%) of advisor's have a written plan for their succession, and the vast majority of advisor's were not even ‘thinking about’ the eventual transition of their business. In the era of Covid-19, however, this appears to be changing. A growing number of financial advisor's are realizing the importance of having a robust and well-documented Succession or Transition Plan in place.
This is a positive development. After all, the reality is that every advisor will one day transition out of their business and eventually exit the industry. The only question being on what terms and conditions. It seems obvious that not having a plan in place for an event that is certain to take place makes no sense whatsoever. A robust and well-documented plan is in the best interest of not only advisor's but also their clients, family members and staff.
What can we do to help financial advisor's take effective action and ensure their readiness?
In a series of articles over the next several months, we intend to explore the subject of Succession, Continuity and Exit Planning and the related trends and challenges facing advisor's in 2020 and beyond. Our objective is to offer insights and practical tips and suggestions on concepts and strategies, including case studies from The Personal Coach, to help advisor's take action and effectively shape the future of their firms.
Getting Started - Take a Different Approach to Transition Planning
One of the most frequently asked questions I get from advisor's who are keen to develop a Transition Plan is - ‘Where do I start?’
What I often suggest is that they start by adopting a different way of thinking about the concept of Transition Planning. And that starts with a clear understanding of the terms Succession Planning, Continuity Planning and Exit Planning and how these concepts ought to work together to create a robust Transition Plan. By doing so, advisor's will create for themselves a sense of direction, an understanding of the options available to them, and a clearer path forward.
Just about every advisor I know uses these terms interchangeably. In fact, they mean very different things.
Succession Planning – refers to the plan that ensures the seamless and gradual transfer of ownership, leadership and management of an advisor’s business internally to a new generation of advisor's.
The key point is that the founding advisor's business will endure beyond the life and career of the advisor….and no longer has to rely primarily upon that advisor.
Exit Planning – refers to the plan that ensures the transfer of ownership, leadership and management of an advisor's business to an external third party.This transfer is typically a 100% transfer of ownership and means that the founding advisor's business does not endure beyond his or her own career.
Contingency Planning – refers to the plan that ensures the seamless transfer of ownership, leadership or management of the advisor's business in the event of a random and unplanned event –death or disability being the most common, but pandemic as well.
One plan is neither better nor worse than the other. They are just different.
A Succession Plan at its core is about growing an advisor's business by including another generation of advisor's and leveraging their skills, talent and energy;
An Exit Plan, on the other hand, is about monetizing an advisor's business and bringing their practice to a close and career to an end;
A Contingency Plan is about insuring an advisor's business and preserving its value in the event of a major unplanned and negative event.
Conventional wisdom would suggest that an advisor must choose at some point in their career between an internal Succession Plan and an external sale to a third party. This kind of thinking is misguided. A smarter and more effective approach is for an advisor to develop a more comprehensive plan that incorporates all three of the plans described above. Ideally, it should always start with an internal Succession Plan and include a Contingency Plan. In this way, if the internal Succession Plan does not work to the advisor’s satisfaction, an external sale to a third party becomes their fallback strategy.
The term Transition Plan, therefore, refers to the advisor’s plan or strategy that incorporates their respective Succession, Contingency and Exit Plans and outlines the process of changing the advisor’s role as owner, leader and manager of his or her business over time to ‘something else’. That ‘something else’ can be whatever the advisor wants it to be aligned with their long-term goals, objective and vision for their life and business.
The Bottom Line - what are the key insights advisor's should take from this?
Every advisor will one day leave their business and exit the industry. Not having a plan in place makes no sense and is a breach of your duty to clients, family members and staff;
Start by adopting a different mindset and approach to Transition Planning. Understand the differences between Succession, Exit and Continuity Planning and how they work together;
Every advisor, irrespective of age and stage of career, needs to have a Continuity Plan;
It is never too early to begin Transition Planning. Every advisor between the ages of 35-50 ought to be developing a Succession Plan;
Every advisor over the age of 60 ought to be developing their Exit Plan.
Suggested Next Steps – what can advisor's do to get going and enhance their preparedness?
Get Educated – read up on this topic and talk to one of our coaches to learn more;
Get Started – email The Personal Coach to receive a preliminary Self-Assessment;
Get Help – connect with Afsar to schedule a Complimentary Consultation.
Afsar Shah, Business & Regulatory Coach at 3:30 PM
Since the great depression, dips, downturns and nosedives in the financial markets have set investors on edge. In the wake of Covid-19, the razor’s edge has never been thinner. As financial advisors well know, sleepless nights often transform into decisions that are more ill-conceived than prudent. Coaching investors through these uncertain times — before, during and after a crisis — is critical.
When the market drops, conversations with your clients become vital. The importance of those exchanges does not wane as a crisis abates or, in the case of the coronavirus, isolation becomes standard operating procedure. “Financial advisors need to connect with their clients to find out what concerns them,” says April-Lynn Levitt, a certified financial planner and business coach with The Personal Coach, which offers customized business coaching for advisors, in Oakville, Ont.
Dig deep, advises Chris Hornberger, a certified executive coach in Halifax. “You need to understand your clients’ specific concerns. Identify what they are worried about.”
Forward projections help you do that, Hornberger adds. Determine where clients want to be financially (and otherwise) in five years’ and 10 years’ time. Review their financial plans to see if, even in the midst or the wake of an economic upheaval, those goals still can be attained. If not, discuss how a plan could be revised to make them attainable.
Taking a step back in time with a client also can be beneficial, says Hornberger. “Ask them to recall a similar time previously when they were concerned. Ask them how they got through it. Ask them how their life — and their finances — were affected.”
Coaching clients is fundamentally about building trust. Will clients naturally turn to you after the storm has passed? “That is a measure of their trust in you when they reach out,” says Hornberger.
Hornberger adds that not receiving calls from clients is not necessarily a good thing before or after a crisis. “Do not assume if you are not hearing from clients [that] it is because they are not worried. If they do not hear from you, it can create distance.”
Looking at the issue from more than one angle and time frame can also help clients put any declines in financial markets in perspective. Covid-19 aside, market downturns are status quo. “Remind clients that we [recently were] in the 11th year of a bull market, which is historically much longer than normal, so downturns shouldn’t [have been] unexpected,” notes George Hartman, CEO of Market Logics Inc. in Toronto.
Coaching clients through uncertain times is about more than pointing to longer-term projections. “Play a leadership role when things are bad. Go beyond the investment information. See the big picture,” says Levitt. Coaching is ultimately about building a relationship that will stand the test of time and tumult. That relationship requires ongoing touchpoints as situations change, often at breakneck speed. “Communicate before, during and after,” says Levitt. “Define your market philosophy.”
Clients need to know you are there when they need you — and even when they don’t. But during downturns and their aftermath, visibility is paramount. “It’s about sharing. It’s about being proactive,” says Hornberger. “Reach out. Communicate early and often. Reassurance is central to this process.”
In situations such as market downturns, when you may be concerned that clients may blame you for poor performance, there’s a natural tendency to be guarded. “Our first instinct is often to defend,” says Levitt. “Our recommendation is to step back. Ask the client what concerns them; then you can offer solutions and advice.”
Stepping back can be hard, Levitt adds: “Clients can be confrontational. There is so much uncertainty, and it is not just financial.”
Clients aren’t the only ones who have anxious nights when the markets go in unwanted directions. You’re adversely affected in two significant ways. First, you’re worrying about your clients and their concerns. Second, you’re worried about your own business in both the short and long terms. Frightened clients can go elsewhere or exit the investment market altogether.
You also must focus on yourself when the going gets rough. “You need to take care of yourself. Meditate, exercise, get out in nature,” says Levitt. “You need to handle the stress and not get sick.”
You can feel better knowing you’ve laid a solid foundation for whatever crisis — natural disaster, market crash or pandemic — clients are in the midst of weathering. Indeed, your coaching role begins before there is anything to worry about, says Hartman: “The key to mitigating concern in market downturns is to prepare clients ahead of time for the inevitability that markets will likely be volatile during the time [clients] are invested.”
Hartman suggests you make a point of talking with your clients about the ups and downs of market performance during every annual review: “This should include historical performance illustrations, magnitude of decline [and] recovery periods.”
Managing clients’ expectations is essential, agrees Levitt: “Everyone will see a slowdown. Before anything happens, you should be talking to your clients about downturns.”
It is important to ensure you have a current market meltdown plan in place, Levitt notes: “This does not have to be complicated. If something happens, how can you be ready to reach out and to whom do you reach out personally? This is not a case of sending out just one email.”
Your meltdown plan will contain such information as which clients need to be on speed-dial for reassurance and which clients like to buy during a downturn. Your plan also will contain draft emails and templates that can be sent quickly to all or certain clients with little revision. Where appropriate, the information can reaffirm that there is insurance in place and/or a rainy-day fund.
“Emphasize [to] clients [that they] are working toward a goal — not reacting to market downturns,” stresses Levitt.
Post-crisis is an ideal time to update your plan: review what worked well, what worked as planned and what needs to be revised and rethought. As a crisis wanes, it also is an optimal time for you to identify gaps in your market meltdown plan and ensure those gaps are addressed for next time — because there will be a next time.
Your updated plan also must spell out how you will connect with clients, and continue to connect with them if you can no longer get to your office, if power service is more than sporadically interrupted or if concerned clients cannot meet with you face to face — perhaps because much of the community has been shuttered. Literally.
Technology: Making It Work With What You've Got and When To Upgrade
A few years ago, an advisor told me that I was really good at helping his team leverage the technology in their office. In fact, he took a business card and on the back, penned the title of a book I should write, and I have kept it with me all these years. The title? "How to Make it Work With What You've Got" - 300,000 copies sold by Emily Bennett!
It is a reminder of how I approach technology in the office; you need enough of it to simplify the tasks and keep you compliant, but it should not be the ultimate driver. Having a solid foundational understanding of technology should be the goal. And, once technology fails to meet your needs and goals, it’s time to re-assess how you’re utilizing it in your every day.
I recently read the Top Technology Predictions for 2020 by World Economic Forum. The prediction that most resonated with me was “learning on the job will never stop.” Cloud technologies make it convenient and simple to stay current and to keep that learning momentum; however, most advisor practices fail to determine how technology can be applied and work FOR their business. Server and database technologies require regular upgrades to stay current and avoid any potential security issues. Still, it can be overwhelming to dedicate the time and headspace to keep on top of it. That brings us full circle in, ultimately, technology isn’t helpful if misused or fails to meet your needs and goals.
To understand your current situation, ask these questions:
1. Is your technology compliant? Consider that older servers, systems, and mobile devices run the risk of being non-compliant from a security perspective.
2. Does everyone have the right access to technology where they work?
3. Are you duplicating effort? For example, do you often copy and paste between applications or emails?
4. Are you able to produce reports, dashboards, or analytics in real-time to see how well client services are performing or to identify client opportunities?
5. How is technology part of every transaction with your clients? Are you interacting with your clients the way they want? Does everyone in the office have the ability to enter information about client interactions? Are these notes retrievable by those who need access? Are you reaching out to your clients enough? Too much?
The responses to these questions can help you determine if you need to upgrade your systems or make better use of the technology you have implemented in your office. A more detailed assessment can help find the gaps and build a plan to achieve your technical goals to make the most with what you’ve got.
Having spent over 30 years in the financial services industry, I have found two things to be true; everything and nothing has changed with the day-to-day challenges advisors face.
Everything has changed with technology and moving from paper to electronic, regulatory requirements, fee disclosure, anti-spam requirements, the amount of back-end support, medical underwriting, saturated marketplace and competition, and the list goes on.
Nothing has changed with one simple fact; advisors need support to survive and thrive.
I’ve always enjoyed working with financial advisors. My most satisfying experiences have come from helping advisors turn their businesses from struggling to thriving. Being an advisor can be a lonely business, and often the piece of the puzzle that’s missing is having someone in your corner.
Since joining The Personal coach last Spring, I’ve been implementing practice management strategies into advisors’ businesses. It’s also been a privilege to be featured in Forum Magazine discussing COI relationships, representing the team at Advocis meetings, and addressing closed audience sessions with Faith Life Financial. Coming up next is sharing insights on understanding your finances at our Fall TPC GeneratorTM event.
Having The Personal Coach’s support to pursue my adventure is motivating and exciting. Most importantly, I’ve had the pleasure of being part of an incredible team that leaves no stone unturned with the depth and breadth of their expertise. The Personal Coach has fantastic resources; HR support, team development, succession planning, marketing, and branding. As a team, we provide full-spectrum support for advisors. We often refer to ourselves as an extension of an advisor’s team. It’s rare to find a support team that has so many arrows in the quiver. This allows me to start each day with enthusiasm to help advisors find their way and fully develop their businesses and enjoy the fruits of their labours. I believe strongly that success in business is more likely to be achieved and, more importantly - savoured if it’s integrated with a fulfilling personal life. When we work together and clear out the clutter, we achieve success.
Our office has been working with Pat Giesbrecht for the past six months, and I am so happy with the results we are getting. We have completed many projects; DISC profiles, re-segmentation, written procedures, Contact Management changes, new technology implemented, job descriptions reviewed and solidified, the opportunity for all to share our progress, challenges, and successes. The best part is the teamwork this has inspired, the sharing, the helping and overall coming together for a common goal. It’s been far more comfortable for us to share the workload when our goals were clear. The staff took much of it on, were accountable, and excited about the changes.
William Shakespeare penned, “What’s in a name? That which we call a rose by any other name would smell as sweet” – but would it be as memorable? We’ve had the opportunity and pleasure to help advisory firms across Canada develop compelling brands and company names. Here we share some tips to help you establish a company name that is both personal to you and memorable to others.
Apple, Nike, Mercedes, Amazon, and Google; these names appear to have nothing to do with the type of business they are in, yet these companies are incredibly successful and are household names. As Sasha Stauss, brand strategist, explains, “Successful businesses are not selling a service they are selling an experience, a sensation, a focused promise, and most of all, a story.” Even if the product or service, like Apple or Mercedes, is expensive, the company will still be very profitable. What makes them successful? For starters, they are entirely in control of how they want you to think.
For example, Apple clients believe they are unique and think differently outside of the norm. Mercedes owners believe they perceived as elegant and successful. Even if the car or the phone (remember the iPhone battery debate?) had a reputation for consumer concerns, we would value the brand over any misgivings. As humans, we want to be a part of something that makes us feel good about ourselves.
So how do you go about creating a name for your firm? Do not try to explain everything in a company name. A company name is one part of your brand, just as your logo and slogan are elements that serve a specific purpose within your communication strategy.
Be unreasonable in your creative process. Pick a thing, an object, or a feeling that will connect your ideal clients to your promise. A few of the company names we’ve developed for Financial Advisors are Blue Whale, Aurora, Gallery, Arrival, Framework, Forté. These (like Apple, Nike) having nothing to do with industry, but everything with reflecting the team inside the name.
Don’t be hesitant to pick a name that supports a theme and uses analogies. A past client, Framework Financial, purchased a custom-designed wire sculpture they call the Vision Frame. They use it to communicate their value. It encompasses both theme cohesion and has a local community feel, which reflects the hometown pride that resonates with clients.
An impactful company name is simply a recognizable or interesting word that sticks in our minds. This is magnified if the name reflects the personality of your business. Reg from Gallery Wealth Management has a passion for nature photography, and since most of his client’s come to his office, they converted it into a photo gallery. When clients arrive, they become part of the brand and culture. How do you think this will positively impact the meeting?
Your company name should engage clients to FEEL they are part of something beyond just providing a service.
From a degree in Geology to a career as a Business Consultant later a Financial Advisor, Sandra Schmidt has always been a master of change. Now, she embraces her most recent endeavor - retirement.
A native of London, Ontario, Sandra describes her upbringing as akin to a Norman Rockwell painting. The third of four girls, Sandra, reflects on her childhood as warm and loving. Her father was an actuary with London Life and her mother, trained as a teacher, chose to be a stay-at-home mom, as did many of that generation. Attending church was a big part of Sandra’s childhood, given that her father was a soloist in the choir, and her mother ran the Sunday school. Mostly, Sandra recalls both parents always encouraging their daughters to find their passion, to do it well and to remember that in life, there are no limitations – you can do anything you choose.
Inspired by her parents’ words, after Sandra graduated from high school she followed her father’s example and attended university at Western. There she received her Bachelor’s degree in Geology. A short stint in the Arctic, however, convinced Sandra that spending over half of each year in remote locations wasn’t all that appealing. She decided that a business education might be a path to consider and returned to Western, this time as a student in the Business program. It is here she met the love of her life, Duff Schmidt,
who hailed from the Okanagan in British Columbia. By January of the following year, the couple knew wherever they would go; they would go together. When asked how they decided between British Columbia and Ontario, Sandra says, “Duff said he wanted to be where the skiing was, so
away we went to Vancouver!”
Almost directly out of school, Duff started with Mutual Life in the Estate and Financial Planning Services (EFPS) area. Sandra accompanied him to various corporate events and conventions, and it was there she began to notice the
opportunities available in the financial services industry. Through the years, Sandra continued to develop close relationships with management at the local branch of what is now Sun Life Financial, who would consistently tell her,
“When you get tired of what you’re doing, come and work for us.” Fast forward five years, Sandra knew it was time for a change and left her role in Strategic Planning consulting and in June 2000, her career as a Financial Advisor began.
Though a logical and natural transition, Sandra describes the first few years as an Advisor being “really tough.” Similar to what most advisors experience, Sandra also quickly exhausted her natural market. Prospecting was tough and, in need of people to talk to, she developed a game plan that was strategic and proactive. Scouring her Rolodex, Sandra approached individuals who were well-placed HR managers and could get her in the door for a 45-minute “workplace solutions” presentation. Attendance was high during these
sessions, and Sandra’s genuine approach and willingness to invest her time with clients resonated well and served as a foundation for her future success. At that time, the Financial Centre offered a mentorship program that paired new advisors with more tenured campaigners. It was during this program where Sandra met Al. Al not only served as Sandra’s mentor but soon became her friend and eventual business partner. In 2005, with the
partnership flourishing, they moved to a new location in downtown Vancouver.
In 2008, Al was approaching retirement and in the early stage of his succession plan, which included transitioning out of the individual business. Sandra had already been helping to service many of Al’s clients over the past several years; still, the formal transition was a significant change and Sandra felt that she needed some additional guidance and support. She reached out to a colleague who had been in a similar situation who referred her to The Personal Coach. Sandra says she has always treated her business like a business, but working with Juli Leith offered her a very different perspective on how best to organize, structure and manage her practice. This new relationship eventually led to an even higher level of success for Sandra. “Working with Juli ensured that I didn’t simply double how hard I worked just
because I had doubled my business” Sandra reflects. With her business bustling, ensuring her work-life balance became an even more significant challenge and necessity. At the end of each busy day, Sandra would come home, kick off her heels and sit on the floor in the kitchen and talk to her dog, Molly. “I would tell her all about my day - she won’t share my secrets.” Sandra’s business would continue to grow and flourish and the next 11 years flew by.
During the summers, Sandra and Duff would take some much-needed downtime to recharge their batteries. In 2017, Sandra found that she was growing increasingly less enthusiastic about returning to work. That’s when she knew it was time to start thinking about and planning for her succession strategy. Sandra’s daughter, Leigh, had worked for Sandra’s team as a summer student while studying business at the University of Victoria. Also, Leigh had covered a year of maternity leave for one of the staff. When asked if she would consider becoming an advisor, Leigh replied: “no thanks” – déjà vu from when Sandra was first asked! Leigh and her husband John followed their dreams and moved to New Zealand for two years for John to pursue a degree in winemaking. After returning to Canada, they settled in the Okanagan wine region, and Leigh decided the timing was right and pursued a career as a Sun Life Advisor. She has since taken on Sandra’s Okanagan clients as well as Lower Mainland clients Leigh was already supporting. The balance of her business transferred to colleagues whom Sandra had worked with for years. Citing as the vital element to choosing a successor, “We already had a great rapport, I knew who they were and what their values were. I knew my clients would receive the same level of integrity and respect
as I had shown them”. Sandra is so proud of Leigh and the Vancouver advisors. After her clients had moved to their respective new advisors, Sandra stayed on for three months to ensure it was a smooth transition. In May of 2019, Sandra officially retired. She has since run into former clients and receives emails and cards saying thank you for picking such great advisors to carry on the legacy.
Receiving accolades from her clients isn’t surprising. You only have to hear Sandra speak about her time as an advisor to understand how she cherished the relationships she built. She had several families where she serviced four generations! In her own words, Sandra shares, “It is such a privilege and
honor to participate in a small way in a family’s life – and with such an intimate topic. To be a steward is such an honor”. Reflecting on one family in particular, Sandra can’t help but become emotional. In 2004, the file of two clients was passed on to her - a husband and wife. Eventually, she gained the business of his mother, and then their children and grandchildren, too. One year, Sandra noticed a change with the wife; that she didn’t seem herself. It was then, when the client was in her early 50’s, that she received a diagnosis of early-onset Alzheimer’s. Amid this turmoil, it was comforting that the planning work done with Sandra allowed the husband to take his retirement early to care for his wife up until her passing. When asked what her guiding principle is, Sandra humbly shares, “you must have a solid sense of what is right and wrong. Be kind to one another and do the right thing. Show up when you’re supposed to show up and mostly, be the advisor you’d like to have”. What started as an attraction to business turned into a genuine love for people. “I had no idea how much I would fall in love with the clients. It was never about me; it was always about them”. For anyone thinking about becoming an advisor, Sandra shares the following sage advice “be prepared for the roller coaster. It’s not easy, and there are two tracks on the roller coaster; emotional and financial – they go hand in hand. Know what an honor it is. Clients will tell you things they won’t share with others; it’s all about trust”.
“What we do as advisors matters.”
Since May, Sandra has been enjoying every moment of retirement. She reflects, “I used to hear from retired people and they would tell me how busy they were, and I wondered, how can they be so busy? I don’t wonder that anymore!” With Duff also retiring in the Fall of 2018, their days are spent
enjoying the outdoors, loving time with their expanding family, reconnecting with friends, traveling and truly living in the present.
Sandra, on behalf of The Personal Coach, congratulations on a magnificent career and your retirement!
Mergers & Acquisitions: A Roadmap to Maximizing Value
Thursday, November 21, 2019
The most frequently asked questions I get asked by advisors who are thinking about acquiring a book of business are – ‘Where do I start? And what steps should I take to ensure that I’ll be successful?’ Advisors are right to be concerned because most acquisitions involving professional services firms (anywhere from 70-90%) fail to achieve their pre-acquisition objectives. Whether it is a lack of strategic planning, poor integration planning, failure to pay attention to risk management, culture clashes, or spending too much, the truth is, acquisitions are hard to get right.
Set out below are 6 “must-do” best practices that will help you create value and increase the likelihood of your success when acquiring a book of business.
1. Understand Your ‘Why’
It is imperative that you start by clearly understanding what is driving your desire to make an acquisition. What are the outcomes and benefits that you hope to achieve? Whether it is to reposition your client base, enter into a new market, or simply to acquire additional assets for greater scale and increased revenue, understanding your ‘why’ will bring clarity and focus to your M&A strategy. It will ensure that your M&A strategy aligns with your vision and the strategic direction that you have set for your firm. It will also create a set of criteria for you to evaluate the merits of a particular opportunity and enable you to identify the profile and characteristics of your ideal target firm. Given the cost, time, resources and personal commitment required, you cannot afford to start your M&A journey by heading in the wrong direction.
2. Assess the State of Your Business
Prior to going to market, every advisor should first ask themselves a fundamental question: ‘Is my business truly ready to take on another book?’ Buyers who go to market before their business is ready are more likely to destroy value than create it. So take a hard look at your business and make sure that your workflows, processes and procedures are efficient, scalable and align with regulatory requirements. Make sure that you have a team in place that can help you to integrate and service a new book and continue to maintain your existing clients. Integrating a new book onto a business platform that is less than rock-solid is asking for trouble. In today’s market, sellers have choices, and they are looking for buyers who can offer their clients the most value. So lay the foundation for a successful acquisition by ensuring the strength of your business model and service platform.
3. Valuation – Don’t Rely On “Rules of Thumb”
Too many advisors rely on industry ‘rules of thumb’ (ie, a multiple of revenues or percentage of assets) when attempting to value a target firm. Do not fall into this trap. The actual value of a firm is not merely a multiple of revenues or a percentage of assets. Several key factors tend to drive value in every advisory business, including strategic and cultural fit, quality of the client base, recurring vs. non-recurring revenues, transition risk, goodwill (or enterprise value), and regulatory risk. Make sure you do your due diligence and assess these factors if you want to determine the true value of a target firm and prior to putting together your offer.
4. Pay Attention To Deal Structure
Every advisor spends much time focused on valuation and purchase price but relatively little on deal structure and how that purchase price is to be paid. While the purchase price is critical, it is very often the deal structure that determines whether a deal gets done. Most deal structures are comprised of three components: an initial (non-refundable) down payment, a financing repayment stream, and an adjustment to the purchase price if a minimum amount of assets fail to transition to the buyer. How these three elements are negotiated and structured will impact each parties’ perception as to the value of the deal, the buyer’s ability to pay for the deal and, therefore, whether a deal is made. It is also a key way for the parties to allocate risk in the transaction.
5. Create a Joint Transition Plan
Every acquisition will ultimately be judged by the amount of client assets that transition from seller to buyer. The key to every successful acquisition is a well-designed and robust transition plan that maps out the roles and responsibilities of both parties, a precise client segmentation and communication strategy, the role of staff members, and key integration milestones and timelines. The more detail, the better. Do not underestimate the value of a well thought out transition plan. It may be the most important thing that determines the overall success of an acquisition. Start discussing transition planning shortly after you have completed your due diligence and agreed on the price. Make sure you finalize your transition plan before entering into a purchase agreement. You want to ensure that you hit the ground running as soon as possible.
6. Consider Non-traditional Strategies
There are different acquisition strategies you can employ to achieve your goals and objectives. Too many advisors lock themselves into a particular way of thinking about how acquisitions are done. They tend to believe every acquisition results from knocking on the door of a 65 year-old advisor waiting to sell his or her business. This is not usually the case. Broaden your thinking to include non-traditional strategies that can create opportunities where none might have existed. If you have a strong business model and service platform in place, you are in a position to offer a potential seller something more than just a down payment and a promissory note. You can offer them continuity, a safe haven for themselves and a viable option for their clients, all of which are very much in demand in today’s market. Having an open mind can lead you down a different path but towards the same objective.
If you are considering acquiring a book of business and want to increase the likelihood of your success, make sure you incorporate these ideas as part of your acquisition process. They will be foundational to your success.
Afsar Shah, Business & Regulatory Coach at 10:53 AM
Finishing The Year Strong. It's Not Too Late To Amplify Results!
It’s hard to believe we’re already at the end of September and the end of the third business quarter as well. A common theme for September is that it offers a fresh perspective - or a “new year”. Everyone is back from summer holidays, the kids are back to school, and it’s time to reflect on how the year has gone, and how you want it to end.
So, how are you doing? This question can be daunting for most advisors to answer because, even if one aspect of your business is thriving, there could be other factors that are demanding your attention and pulling you away from your preferred focus. Also, if we’re frank, most advisors don’t spend enough time working on their business to develop systems for a routine review and to strategize for the future. This realization means you are not equipped to overcome unexpected challenges causing business growth to stall. It can also lead to frustration, stress, and stagnation. Look at the visual below and apply it to your business. Where are you on the S-curve? If you are reaching a breaking point, it could be time to implement something different that will burst you through that ceiling and start you on a new S-curve.
Wait, where’s the “Staples button” because if only it were that easy. When you hire someone new or install new technology or change a process, you trust that it will make a difference. However, it may be little more than a leap of faith unless you accompany it with talent, procedures, or coaching to support the leap to the next growth curve.
So what can be done right now to end the year on a high note? At this late stage, less is more. The best course of action is to reflect on the goals you set at the beginning of the year. Are there any that you identified as integral to the success of the business that are still incomplete? What are your team’s views? Have they identified any items that require your immediate attention? Now is the time to narrow your focus to the critical elements of your original plan. Pick one or two top priorities and implement the necessary changes. Moreover, remember that effective collaboration produces results that are greater than each individual’s contribution. This rule applies to whether you build your team internally or create a virtual team of external resources. There is still time to amplify your results for 2019.
“It is not the strongest or the most intelligent who will survive but those who can best manage change.”
Are you looking to grow your business? Save the date for our Generator Event! Tuesday November 26, 2019
If you want to grow your advisory business, get this date in your calendar!
Tuesday November 26, 2019, Cambridge, ON.
This TPC event is for advisors looking to grow their business, double their revenues and achieve time and money freedom. Full event details and sign up information here: www.tpcgenerator.ca.
Alison Ottewell is helping advisors to connect and have an online presence.
Digital shouldn't be daunting! Creating a digital Marketing Strategy that works with your business is realistic and achievable. Engaging videos, compelling blogs and Social Media success is within your reach. Connect with Alison today at email@example.com.
Every once in a while, thankfully not that often, we get a stark reminder of the one factor that is so very critical to building a sustainable advisory practice: TRUST. It is fundamental to client acquisition and developing those clients into positive long-term relationships. Our view, of course, is that trust has to be “table stakes” as you build and manage your practice and that it is a currency to be fiercely guarded by yourself, your organization, and your suppliers.
In his book, The Speed of Trust, Stephen M.R. Covey offers many great thoughts about trust that might serve as food for thought on the topic.
First, the reality is that where trust is high, it increases speed and lowers cost. Where trust is low, it reduces speed and increases the cost. For an advisory practice, that often means ensuring that you have the right people in the right roles working with strong knowledge and well-developed practices and procedures.
That trusted formula is: (Strategy x Execution) x Trust = Results
The element of trust can be a tax or a dividend and, clearly, distrust has a cost attached to it. If your team members, or yourself, don’t trust your knowledge, your processes, or each other, the cost can be high.
It’s worth saying that self-trust is a crucial factor; if you don’t trust you, why would anyone else?
As you think about this topic, keep in mind that there are four critical elements to trust:
1. Integrity: Be honest, stand by your principles, and do what you say you’ll do. Increasing integrity starts with making and keeping commitments to yourself, standing for something, and being open.
2. Intent: Have good, positive motives. Let those motives inform and populate your agenda and ultimately, your behavior. You can continuously examine and adjust your motives and declare your intent.
3. Capabilities: Develop knowledge and abilities that evoke confidence and keep learning! Covey suggests that we use the acronym TASKS (Talents, Attitudes, Skills, Knowledge, Style) as we think about capabilities. Always be working on your TASKS. Increase your capabilities by running with your strengths, keeping yourself relevant, and knowing where you’re going.
4. Results: Establish a track record. Results are an indicator of how well you are doing in the other vital areas and you can think of them as the fruits of your efforts. They can also give you credibility. So, take responsibility for your results, expect to win and finish strong.
There is much more to the trust conversation but it all starts with ourselves. Looking inwards before pointing fingers elsewhere can often set the tone for making positive impacts.
At The Personal Coach, we utilize our Velocity IndicatorTM as an exercise for self-assessment on your business practice. We couple that with a Complimentary Consultation which confirms and clarifies some of your thinking and potential next steps. We believe that the advisory business can be a very lonely one when it comes to managing and leading your practice and it is beneficial for you to have a sounding board and another set of eyes and ears to help you set your course.
To learn more about your business and where you fall on the trust scale, request our Velocity IndicatorTM exercise by connecting at firstname.lastname@example.org.
Heather Amlin is helping teams address gaps in their processes and workflow.
Our Operations and Efficiencies Coach, Heather, has created a Back Office Checklist to identify the gaps in advisor team processes and workflow. Heather has divided the Checklist into 3 key areas; Technology, Office Procedures and Client Services. When is the last time you reviewed your own processes? The timing could be perfect to finish the year strong. Book your back office assessment with Heather today!
Welcoming our newest team member.
The Personal Coach team has grown again! Our Marketing Specialist, Kelly Maxwell, delivered a beautiful boy this month. Welcome to the world Parker Michael Maxwell and congratulations to Kelly, Paul and big sister Aubrey.
Are you looking to grow your business? Save the date for our Generator Event! Tuesday November 26, 2019
This TPC event is for advisors who are looking to grow their business, double their revenues, and achieve time and money freedom. For full event details and registration information, visit www.tpcgenerator.ca.
Want to Stand Out in a Crowded Market? Maybe it's Time for a Brand Strategy.
Now that summer is here, you may have some extra time to review your brand and see if any enhancements could be made. Do you think your brand communicates what makes your business unique?
Remember, you want to be your clients' and prospects' only choice. A unique brand that encompasses your business values and the overall client experience helps to ensure that your messaging will set you a part from the rest.
As we have always said at The Personal Coach, branding is much more than simply your marketing materials. It is integrated into every aspect of your business and affects how you communicate and do business. It helps you maintain a consistent message, strong reputation and gives people a good understanding of what they can expect when working with you.
You can however, do a preliminary review of the quality of your brand by going over your marketing materials or "TouchPoints."
1. Business name - your business name should be interesting and communicate what you provide in an intriguing way, leaving people wanting to ask more questions.
2. Slogan - do you have a catchphrase and if so, is it memorable?
3. Descriptor - this should clearly state what your business provides and for you?
4. Logo - this symbol should connect the message between your name, slogan and descriptor as well as spark interest through imagery.
5. Stationery - does the font, design and layout align with your brand message?
6. Greeting - answering the phone, meeting face-to-face and email communications, do your client interactions exemplify your business values and are they consistent across the team?
7. Website - Does the design match your brand? Is the text clean and concise with a strong call to action? Do you feel proud to show people your website?
Enhancing just a few of these items can make a big difference in your overall brand. If you find you don't have a brand or your brand isn't consistent across marketing materials, or doesn't truly feel aligned with what you and your business are all about, do not hesitate to reach out.
First, comes the brand identity and then comes marketing materials you can be proud of! To learn more, let's pencil you in with our Brand Coach, Fortunato Restagno. Happy Planning!
Fortunato Restagno., Brand Coach
T: 519-576-2262 X4
If you want to grow your advisory business, mark our workshop date in your calendar!
Tuesday November 26, 2019, Cambridge ON
This TPC event is for advisors looking to grow their business, double their revenues and achieve time and money freedom. Full event details and sign up information can be found here: www.tpcgenerator.ca.
Kim Poulin is helping teams, of all sizes in all industries, empower their people to engage, connect, and thrive in the workplace.
Start your organization on the path to personalized insight and cultural change today. Join us in our belief that an organization’s true potential lies within its people. Learn more details about building your team effectiveness and productivity at the website: kimpoulin.com.
Welcome Sue Block, Administrative Assistant
We are excited to have Sue join The Personal Coach team. Sue has valuable industry experience including time at both Manulife Financial and Arca Financial Group. Having worked with several of our team members in her prior roles, we know firsthand the professionalism and quality of work that Sue brings to the table. We look forward to her supporting our team and our clients.
Welcome Alison Ottewell, Marketing Coach
Alison joined our team backed by 10 years of marketing experience - 8 of those focused in the financial services industry. Alison has the skills to build a tailored and impactful marketing strategy that will work for advisors. She has helped advisors coast to coast build marketing strategies that are clear, realistic and work with their team’s capacity and budget. We are happy to have Alison on board.