I will be castigated for saying this but I do not have an exit plan. I know; it is ludicrous at my age. In fact, why have I not exited already?
I thought it was only me that had not figured it out but after several conversations with others in a similar position I find I am not alone. It is not that we have not given it any thought; it is simply that the options being touted are not compelling.
Consolidators come knocking almost weekly with generous looking valuations but when I have bothered enough to crunch the details I discover that clients end up paying higher fees post-acquisition. If I thought it was right for clients to be paying higher fees, I would be charging them now.
And therein lies the rub. The deals do not appear to create an equal or better outcome for clients. They end up paying more for less. More fees, less choice, lower service levels and less trust?
I can think of several advisers who have sold their clients, and a few years later, after establishing a new business, have won them straight back. Something was clearly missing after the sale.
Consolidators are a distraction but I feel I ought to be having the conversation, if only to keep an open mind. The truth is, I am not ready to exit. Not a complete exit. Though a phased withdrawal into other interests would work. There is still stuff I am learning that gets me out of bed in the mornings, but not the technical stuff around pensions and tax. That leaves me cold.
It is the people that interest me: their stories, what motivates them and their behaviours, particularly in relation to financial decision making.
The more I learn about people, the more I want to change the way we communicate with them, and I reckon I could work on this for a few decades more.
“If I thought it was right for clients to be paying higher fees, I would be charging them now.”
The key for me is to create a self-sustaining, self-managing business that reduces my day-to-day workload and allows me to concentrate on the topics that interest me most. An exit of sorts, I suppose; but not an exit from the business.
Here is where I enter uncharted territory and one of the biggest challenges facing a business owner like me: passing control to the next generation.
My thoughts and emotions mirror those experienced by clients when discussing estate planning and making gifts. That loss of control.
The increased vulnerability of giving away assets. The fear that it cannot be undone. The fear of the next generation making a hash of it. The fears are not always rational, of course. But they are there.
Coincidentally, I have recently come across a couple of firms that have already embraced wider ownership through their staff. I have had a brief chat with one and am reaching out to the other. In both cases, the firms are larger than mine, which just might be the motivation I need to grow mine to provide that long-term sustainability. But an exit plan? Not really.
Dennis Hall is managing director of Yellowtail Financial Planning