Why Now is the Time to Sell Your Advisory Practice

For advisors over sixty, delaying the sale of your practice can have significant financial and personal ramifications, especially if you are already considering selling in the next one to five years.

Why It Matters: Many advisors rely on their practice value to fund their retirement, yet often don’t actively grow and manage their equity or plan their succession far enough in advance to ensure the outcome they desire.

Many factors make now the time to sell, especially for advisors who have stopped actively growing their practice and/or whose average client age is over 65.

• Advisor demographic shifts will lead to a surplus of retiring advisors selling at the same time. Excess supply of practices for sale will drive down prices and reduce the number of buyers in the market.
• Valuations peak and decline once an advisor’s average client age reaches age 70. This is because clients at this age draw down their assets and/or upon their passing, transfer them to heirs who may not be clients.
• Regulatory pressures are increasing, resulting in rising compliance costs and significant impact on the operational dynamics of advisory firms. Selling to a larger institution or merging with another practice can provide relief from the burden of navigating complex regulatory environments independently.
• Disruption from technology is forcing advisors to compete with Robo-advisors, AI, and other digital platforms. Selling now can enable advisors to leverage the technological capabilities of acquirers and remain competitive in a rapidly evolving landscape.
• Advisors near retirement age shift their focus to lifestyle instead of growing the practice. Selling the practice allows advisors to transition into retirement or pursue other interests while ensuring continuity of service for their clients. By offloading the responsibilities of day-to-day operations, advisors can enjoy a more relaxed lifestyle without compromising on the quality of service provided to their clients.
• Risks from market fluctuations, compliance, and other areas can leave solo and small advisory practices vulnerable. Selling the practice can mitigate these risks by transferring ownership and management responsibilities to a new entity. Advisors can secure their financial future and protect the interests of their clients by proactively addressing potential risks through a strategic sale.

Take Action: No matter where you are in your advisor journey, there are steps you can take now to ensure you and your practice are protected.

1. Get a valuation: Knowing where your practice value stands now, and when it will peak, is the first step toward making an informed decision about your succession. Learn more about valuations here.
2. Look at your succession options: Educate yourself on the differences between open and closed market sales, as well as internal successions. You can learn about common deal terms and structures by watching this on demand webinar.
3. Talk to an expert: Just as your clients come to you for expert advice, you too should seek out Advisor Succession experts who can help you assess your situation and explore your options. Advisor Legacy offers free, no obligation consultations for advisors that are easy to schedule using this link.

You only get one shot at selling your practice. Do it right.