ADVISER MATTERS
That ’ s as far as the analogy goes , however it stands to reason that a business which is fully documented , with great MI , and a strong advice process which is built on the foundation of solid compliance audits , should be worth more .
Let ’ s explore the key elements which would make up an exit strategy .
Compliance : this forms the foundation of a business to ensure systems and controls are in place and to make sure it follows regulator expectations . Audits will pinpoint areas of weakness which could present an element of risk to a potential buyer . This may need to be rectified which would cost a buyer time and money .
Charging structure : Is it clear , fair and not misleading ? Let ’ s park the ‘ misleading ’ bit , and concentrate on ‘ clear and fair ’. Have you undertaken an exercise to ensure your charges reflect the work done to conduct financial advice , or are they inherited , or even just a guess ? Consider a documented methodology which will pinpoint the minimums required to bring your services to the marketplace , which will lead on to setting thresholds and identifying your advice gap . From there you may consider steps to make your advice process faster , better and more efficient , each area being a plus point for potential buyers .
Centralised Investment Proposition : A process that can be centralised and monitored will add efficiencies into your business , not only that , but it should follow regulator expectations and promote good client outcomes . This covers a number of key areas , by driving said efficiencies into the advice process , removing risk , increasing systems and controls and creating MI for potential buys .
Management Information ( MI ): Where is the value in your business ? Some say it ’ s in the adviser themselves , however , from a buyer ’ s point of view , they want to get under the bonnet and see the figures . There still are firms out there who have client details in filing cabinets , or maybe client information stored on different systems , information that ’ s difficult to extract or clean up . These are the sorts of areas which would present a risk to a buyer , as they are not quite sure of the potential client bank or its value . Buyers , in most cases , would be cautious and probably deflate the purchase price , but on the other hand well documented , comprehensive MI would build confidence in a buyer and could lead to better sale .
There are other areas to consider , and of course you don ’ t have to do any of this , you will still be able to sell and exit . The real question is , will the time and expense spent improving the business result in a greater net return when selling the business . If you think it will , then do it . P
To find out more about Horizon , visit our dedicated web pages , where you can also catch up on our recent Advice Show special .
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