As a significant portion of our community marches towards pensionable age, I thought I would spend some time focusing on how the aging process will have an impact on the mortgage intermediary.
Retiring in your 50s was once heralded as the holy grail of the self-made man, the sad truth is that, having spent 15 or 20 years as a key player within a financial services firm, albeit as CEO, HR director, IT guru, secretary, PR, chief bottlewasher and, more often than not, all of the above, the average adviser falls into two camps. Either they are not quite ready to hang up their boots but can see the need for a major lifestyle change or are glad to turn their back on the industry.
Harking back a generation, there was once a great deal of interest in adviser firm acquisitions. In an ideal world, the combination of an aging industry and the attraction of distribution would result in increased mergers and acquisitions.
But today, suitors are faced with the additional burdens of turbulent trading conditions and legacy issues, especially the liability for 15 years of previous advice.
Those who would be planning to exit the market find themselves competing for buyer interest with people who can no long afford to do business.
What can the professional, successful adviser do to ensure their exit is profitable and keeps their reputation intact?
Start planning. Advisers need to think in terms of a three-year exit strategy.
It is time to employ those chameleon-like qualities to identify other market opportunities to continue to find ways t add value to customers.
Change your recruitment strategy. Recruit entrepreneurial types to benefit from their experience and expertise in starting, growing and selling on successful businesses. Their experience will give you a useful insight.
Delegate as much as possible. Moving clients to other advisers in the business gives your buyer the flexibility to buy the business with all the assets and staff without disrupting client relationships. As long as your clients know you are still around and overseeing their business they are usually happy.
Invest in your brand. Your clients may know and love you well but it is likely that your buyer does not. Raise your profile in trade papers and your own local media to raise awareness of your business. For example, start offering market comments and even offering case studies of clients you have dealt with to ensure your business is represented as an authority on market issues.
Declutter and dejunk. Make sure all your files are up to date to give confidence to prospective purchasers. Any buyer will want to carry out due diligence to make sure what they see is what they are getting.
Know your value. There is a debate over how businesses should be valued but remember that ridiculous over valuations without any tangible transferable value is the thing above all others that annoys the dragons on Dragons’ Den. Think about the deal that you want – usually a combination of down payment, promissory notes and earnouts.
Acquisition, convergence and mergers in all sectors of the mortgage market will surely follow in the summer months following the disruption of the previous six months. Whether you want the flexibility to work for as long as you want or to retire when you want to, you have to take control and plan your exit carefully. Good luck.
Gerry O’Brien is managing director of Home of Choice