Financial Advisory Practice For Sale

Look For These Six (6) Things before Selling Your Practices

Selling a financial advisory practice, or any other practice for that matter, is not an easy decision. You have spent hours upon hours upon working out your succession plan and refining your practice strategies, investing the time and money to make your business “highly marketable,” and now you have finally decided on selling your advisory practice. We advise you to look for these six (6) things before you start selling your practice.

1.What Are Buyers Looking For?

First and foremost, the buyers are looking for an advisory practice that will continue to develop even after you retire. A business with widespread allegiance throughout the team is far more attractive than a business tied to an individual.

Secondly, to ensure profitability, buyers also make sure to review the current profitability margins of the financial advisory market. Specifically, they look at a firm’s revenue generated by the top accounts, a strong financial infrastructure that supports internal and external reporting, a comprehensive list of past clients, firm’s historical records, tracked changes in historical growth, client retention, portfolio activity, client reporting and communication, and the diversity of the account base of the firm.

Along with the obvious factors, buyers want to know about your financial advisory’s relationships with multiple family members, the services offered to cater to the need of the next generation and the frequency of advisor-client interaction.

2.Focus On the Unique Niche

Selling a Financial advisory practice becomes a lot easier when the firm has a unique niche in a specific market. It helps ensure limited competition and above-average barriers to entry. Plus, it is an attractive offer to the buyers when the financial advisory is established and enjoys a recognized high profile position.

3.Tax Treatments

Try to create a win-win situation while selling by carefully considering the price, terms, and the tax method of the buyer. The savvy buyers may try to structure deals in which they are paid as consultants by you, which leads to their payment being written off as a business expense by the buyer. As a result, you cannot claim capital gain.

One way to structure a more tax-efficient purchase contract is internal sales. Your current employees can also offer you a better chance to see your legacy persist over time. They have been on your team for a long time and know your views on how to further your financial advisory practice.


Since most sellers aren’t that finely tuned in with knowing for sure which expenses will be assumed by the new owner of the financial advisory and which would not. It is essential to have discussions with open transparency and full discloser to do so. Any and all topics, issues and possible problems should be discussed.

Keep in mind, selling a Financial advisory practice can yield a massive increase in profitability through the use of the right information. Consulting intermediately firms or advisors would be prudent in a situation like this.

5. Continued Involvement

Construct a deal that allows you to focus on the practices that you particularly enjoy. A common issue with advisory practices is that their owners are quite old. They are usually approaching their 60s. If you are one of them, you can hire a junior financial advisor, so you can let go of your advisory practice gradually. In this method, you will know after training the junior that he/she will keep your legacy and image alive and blotch-free.

Envision your role in the new financial advisory practice after the sale and include that in your negotiations.

David Grau, Jr., founder and CEO of Succession Resource Group, remarkably observed that selling a business is not the same as retiring.

6.Be Confident the Buyers Can Handle the Transaction

Be sure to know the advisory practice buyers have a dedicated team to handle transactions with sufficient bandwidth that makes the transaction process smooth. Remember yourself to ask, “Are there sufficient workforces to deal further clients properly?”

Concerning that, buyers also want a motivate management and financial professionals that are committed to the business and its clients– rather than building a client roster and moving on. These types of employees are valuable in the viewpoint of the buyers as they help maintain the core client base, the cash flow of the company, and provide stability during the ownership transition of your financial advisory.

Selling a Financial advisory practice is a significant event for the advisor that usually takes 6-12 months from listing the company to the close. The better informed you are, the more successful you’ll be at maximizing the sales price and realizing your lifestyle objectives. The most effective way to do that is to consult a business sales advisor. Intermediary firms, such as Advisor Succession, can help you evaluate your needs to make your firm more marketable and valuable to today’s buyer.

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