with Jerry Butler, Business Valuations and Transition Planning Expert
1. What are your personal thoughts on succession planning in the financial services industry?
The stats say that approximately 10% of Advisors have dealt with succession planning in a proper and legal manner. My experience is less. Most Advisors are terrible personal planners.
2. What advice would you give other experienced Advisors in the industry that may have not thought about it?
The biggest threat to all advisors is the unexpected. Approximately 10% of all ‘sales’ or transitions are done because they have to be; disability, death or loss of licence or sponsorship. Lawsuits are becoming a serious factor as well. In addition, having a succession plan and exit strategy does not mean you have to retire. Most transitions include an employment contract. Advisors can lock in the value of their business and continue working with some of their clients but limit the administration and employee headaches.
3. What do you feel are going to be some of the biggest challenges in the industry going forward as Advisors age?
There are several factors for older Advisors. The most important being that your business is worth less every single year! You are probability having to sell because of death, disability, or other unforeseen circumstances, increases. When you have to sell, you can expect twenty-five cents on the dollar, and often as little as nothing. You had an asset worth more than six figures and now you or your estate have a fraction of that.
4. What advice would you provide to new Advisors coming into the industry?
The worst thing that you can do is nothing. Every ‘business person’ should have an exit strategy. Even if you leave in a couple of years, your business is worth something.
5. How has this mindset (of succession planning) changed/improved your practice or business? Or has it?
It has not. Advisors talk about it but do little, or do it wrong far too often. Many Dealers and MGAs are talking about it but are looking after themselves not the advisor.
Jerry Butler CMA MBA CFP FMA FCSI CIM CBV is President of Queenston, one of Canada’s leading companies specializing in business valuations of the financial product distribution industry. Based on their experience and knowledge of valuations, they offer three basic services: Business Valuations, Consulting Projects, and Mergers and Acquisitions. Jerry Butler has over 25 years of experience in the Financial Services sector including 20 years as a Financial Planner. Jerry has work on both MFDA & IIROC Platforms as an Advisor and a Manager.