5 ways to avoid disaster when selling
your IFA business

Story

The word disaster means different things to different people, but when you’re selling an IFA business there’s no mistaking where the dangers lie. The question is, how do you avoid them?

Integrating two businesses is rarely easy, but there are a few key areas to consider, so you have the best chance of a successful sale:

  • Make sure your clients will continue to be dealt with as you have always done – When you’ve spent many years building up a varied client base with both high net worth and lower net worth clients, you need to ensure they’re going to be treated the way you want.

Selling your company to a business that’s only interested in those who have more than £150,000 in investible assets would mean a proportion of your long-nurtured clients would be thrown to the kerb. Is that something you’d be happy with? If not, make sure you bottom out the way your buyer’s business strategy works before signing the contract.

  • Confirm your clients won’t be forced to use more expensive propositions. – If you’ve managed to keep your costs low but sell to a company with a different strategy, your clients may end up paying significantly more for the management of their money, something they’ll not thank you for.
  • Be aware of the potential for personal losses should your client’s leave. – Many sales contracts are written so if the amount of recurring income your business generates within a stated period of time reduces significantly, you’ll not be paid the agreed price for your firm.

Consider this. If the firm has a strategy that either cuts out some of your existing clients or means they start to leave in droves, the assets under management you had would reduce, which will impact on the final amount you’d earn for your business. Not fair, but it’s how many IFAs consolidators work, watch out for this.

  • Be sure the company has a similar business culture to you. – You may be leaving the business, but if your staff are sticking with it, will they thank you for their new employer? These are the kinds of problems that can destroy beautiful friendships.
  • Ask yourself, will you be happy working in the new company? – Significant cultural differences between businesses may be an irritation at the beginning of a relationship, but over time they can become an incredible burden that can affect your health. Imagine it, you’re tied into a contract for a period of time, you have to honour it, no matter how you now feel. Even if you loathe the place you work.

The message is clear – avoid potential disaster by asking the right questions and delving deeply into the way the business works before you sell. Speak to other advisers who have sold to the company before – not necessarily the ones they tell you to speak to either, seek out those who will give you the full story. Any company worth its salt would be happy for you to do this.

In fact, any company should be happy to ask itself the hard questions for you, and give you honest and direct answers that help you make the right decision for your business.

Blog

Read the latest IFA news

AFH Group welcomes Watford-based IFA

AFH Group welcomes Watford-based IFA

Story 08/01/18

There’s good New Year news for clients of an established Watford-based independent financial adviser, who kicks off 2018 by joining one of the UK’s fastest-growing financial planning-led investment management companies.

Continue Reading
Is your IFA business a myth or reality

Is your IFA business a myth or reality

Story 23/02/17

Is your IFA business a figment of your imagination? Many IFAs think they have a clear understanding of their business until the moment they come to sell. Then suddenly they realise it’s all in their mind.

Continue Reading
Advisers turn to in-house investment

Advisers turn to in-house investment

Story 16/02/17

Employing an external wealth manager to help your IFA business grow may seem like a good idea, but there’s a downside to this that many advisers fail to realise until its too late.

Continue Reading
More articles

Get in touch

To discover how AFH's unique approach to wealth management can help you build a better future, please contact us.