I’m an adviser in my late 50’s – what is my exit strategy?

By Hans Egger | July 4, 2015 exit strategy

Many of Australia’s mature advisers are looking at a tsunami of worry coming at them as they consider their exit from the industry. It used to be fairly straight forward – ensure your client base is loaded into a database and is up to date, determine your ongoing revenue stream, put it on the market and someone will buy it for a multiple of around three times.

What’s changed?

  • A demand for minimum qualifications will see many older planners bring forward their sales to 2018 if the expectation is that all advisers need to be degree qualified and/or have their CFP by 2019.
  • Fee disclosure statements are back on the table. A potential buyer will be very concerned that the reoccurring revenue will quickly erode as these statements go out each year especially around the disengaged clients.

So if there is an oversupply of businesses for sale and uncertainty around the revenue there will be downward pressure on the price being paid and a multiple of 2 to 2.5 times with strong claw back clauses will be the new norm.

Who is most at risk?

The single planner practice who has built up their business through the hard work and charisma of the principal. He or she will have a loyal client base that knows and trusts them as the person that has looked after them for years.

Typically this business is in the mature phase with a core of engaged older clients requiring and expecting regular reviews to manage their retirement income streams. There may also be a non core element of disengaged clients that provide a substantial income stream. This business does not spend a great deal of time looking for new clients and is probably supported by one Admin person that also does some of the Paraplanning work.

What are your options?

If you don’t have a buyer or last resort contract with your dealer group then you are down to the following options:

  • The accumulator: this is a medium sized or large business that purchases smaller businesses and employs planners to absorb your client base into their process, they are motivated by the revenue of your business and the profit they can extract through their economies of scale. Don’t expect a great price from the accumulator and the contract will be tight with claw backs as they have done it all before.
  • The new business owner: this is a young planner who has been employed for a while but wants to run their own business and needs a revenue stream to start with. They will be well qualified, tech savvy and enthusiastic but may not have developed the interpersonal skills that your clients admire in you. This buyer will be prepared to pay a higher multiple if, as part of the process they can be embedded into your business and feel secure about your clients staying with the business after you have gone.

If you are prepared to put the time into the new business owner then you will not only get a higher multiple but you will also have the peace of mind that your clients are getting a more personal experience. To improve this further you can look at ways for the new planner to leverage off your centres of influence and set up inter-generational referral processes from your existing clients.

Astute Wheel Financial planning software assists small and larger practices to streamline your practice with a large selection of modelling calculators and client engagement and marketing tools.


Hans Egger is Co-founder and managing director of AstuteWheel Client Engager, Financial Planning Software and Estate Planning Software and admin of The Modern Adviser