Five Questions That May Help You Decide If It’s Time To Sell Your Practice

When you run a small advisory practice, it can feel impossible to keep up with doing it all yourself – the financial planning, investment management, marketing, operations, compliance, and more. Taking a solid look at your business and your future may help you to make decisions to continue growing your firm, or to sell your practice so that you can add more value to your offerings. Here are five questions to keep in mind, particularly if you run a firm with under $500 million in assets.

1. Are you continually adding new clients and always actively marketing to new prospects? If the answer is no, this may be an issue for you. Without working with an external marketing agency, consultant or team – or hiring an internal marketing person – you’re missing out on opportunities to organically grow that your competitors are certainly taking advantage of. If you’re lacking resources in this space and want to grow larger without selling, you’ll need to devote some resources to marketing moving forward.
2. What’s your average client age? If you’ve answered that they’re mostly 60, 70 or older, then you may be facing some issues pretty quickly, as your client book will be spending down their wealth. Without adding in clients toward the younger end working on their wealth accumulation, you may have an unbalanced business ahead of you.
3. What’s your succession plan? If you got ran over by a bus tomorrow, who takes care of your clients? If you don’t have a quick answer to that question, that’s a problem. You need to have a formal and written succession plan, but the unfortunate truth is that many advisors simply don’t – and this is a problem.
4. Are you actually solving a problem for your clients? Yes, you may provide financial planning and/or investment management services, but are you truly integrated into your client’s lives, by offering them other services that they couldn’t find from another provider down the block? If you don’t have a way to differentiate yourself from every other person that does exactly what you do, then what’s the point?
5. How are you handling the complex intricacies of compliance and operations? If you’re not keeping an excellent paper trail for audit purposes, and streamlining your operation and technology systems to make your own life easier, this may be an area where you need outsourced help.

In asking yourself all of these questions, you may find that in order for you to continue growing and remain competitive, you’ll need to outsource resources or hire internally to fill in the gaps to provide the best service to your clients. When that becomes too cumbersome for you, consider that you may have created a wonderful job for yourself, but not a business – and perhaps look into your options for selling, as it may be a great fit for what you need.