Financial Planning

Ten Tips for Selling an Advisory Practice

Our research at the Institute of Practice Management shows that there is a “graying” of financial advisers in South Africa. The average age of advisers is 53 years old. This means that a large proportion of financial advisers should be contemplating their possible retirement in the next few years. What follows are ten tips that could help advisers begin planning their exit from their practices.

  1. Succession Planning — Start your business succession planning early-do not wait until an emergency forces you to sell.
  2. Structure and Organise to Sell — Establish business processes, workflows and relationships that can survive without you. If your expertise is the only value of the practice-and you are leaving-then you do not have much to sell.
  3. Be Realistic — Do not rely on a simple valuation formula. Start creating equity in your practice by laying the groundwork for leveraged growth. Practices that emphasize financial planning will appeal more to buyers than transaction-based business models.
  4. Walk the Walk — Let your clients know you place the same importance on your succession plan as you do on theirs.
  5. Shop Around — Start researching prospective buyers well in advance. Choose a buyer who will offer a high standard of care to your clients.
  6. Stay Involved — If possible, work with the buyer to facilitate an easier practice handover.
  7. Educate Your Clients — If a sale is imminent, let your clients know what to expect.
  8. Educate the Buyer — Explain who your clients are, the special needs each one has and the kinds of products and services they have been receiving. This presupposes you have a great CRM system in place.
  9. Get a Down Payment — Ask for at least one-third of the purchase price up front.
  10. Last But Not Least, Do Not Forget Your Staff — If you have good, loyal staff members, consider negotiating for them to remain on board after the sale. Clients often appreciate familiar faces.

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