Sell and Stay: Why Selling Doesn't Have To Mean Retiring
Context
A successful independent wealth management advisor, 10 years away from retirement, was at a crossroads. The advisor wanted to continue working but sought relief from the operational burdens of running the practice. The firm employed a talented next-generation (G2) advisor, but financial constraints prevented the G2 from acquiring the practice outright. The goal was to find a solution that provided operational support and retirement flexibility for the G1 advisor, while setting the G2 advisor up for long-term success.
The Challenges
The advisor faced three key challenges:
- Balancing the desire to stay engaged with clients while reducing operational responsibilities.
- Structuring a deal that provided financial upside and gradual transition without forcing an abrupt exit.
- Preparing the G2 advisor to take over the practice in the future, despite limited resources for a buyout.
Solution
The advisor partnered with a larger wealth management firm that aligned with the existing firm’s values and culture. The deal was structured to:
- Allow the G1 advisor to continue working with clients on a flexible retirement timeline.
- Offload operational responsibilities to the larger firm, providing immediate relief and ongoing support.
- Implement a structured development program for the G2 advisor, ensuring they received the necessary training and mentorship to eventually lead the practice.
- Include performance-based incentives tied to the continued growth of the practice, allowing the G1 advisor to benefit from future success while gradually stepping back.
The Outcome
For the Seller:
The G1 advisor experienced reduced stress and greater work-life balance while maintaining client relationships. This was achieved by leveraging the operational infrastructure of the larger firm, freeing the advisor to focus solely on client work. Additionally, the advisor maintained a financial interest in the growth of the practice, ensuring continued motivation to stay involved.
- Maintained flexible working hours and gradual retirement planning.
- Retained financial upside through performance incentives.
- Reduced administrative responsibilities, allowing more focus on client interactions.
For the Buyer:
The larger firm integrated the practice into their operations while preserving its existing culture and client relationships. This was accomplished by collaborating closely with the G1 advisor and gradually transitioning responsibilities to the G2 advisor. The buyer's investment in leadership development ensured smooth succession planning.
- Seamlessly integrated operational functions, enhancing efficiencies.
- Expanded services and technology offerings for clients.
- Created a clear pathway for the G2 advisor to take over leadership roles.
Key Takeaways
- Flexible deal structures can enable long-term advisors to gradually transition while preserving client relationships and firm legacy.
- Partnering with a larger firm can alleviate operational burdens and provide growth opportunities without forcing immediate retirement.
- Investing in the development of next-generation advisors ensures continuity, stability, and future leadership within the practice.
- Performance-based incentives can create alignment between selling advisors and acquiring firms, driving mutual growth and long-term success.