Dedicated clients with significant funds to manage are the cornerstone of successful financial service businesses. With more IFAs potentially leaving the industry, their client bases are luring other IFAs to swallow up the available funds to be managed.

Despite rumors of IFAs exiting the business, few are actually selling. Some have little to sell and find it more sensible to work for another year or two to generate income. In reality, these IFAs earn more working than selling if they have a low continual recurring income.

Currently, buyers outnumber sellers significantly. A careful assessment needs to be done to determine whether the RDR might make it wiser to sell or stay in the same place. It is a major step for IFAs to change their livelihood. Typical human behavior is cautious and restful until pushed in a new direction.

With the number of genuine qualified buyers practically doubling sellers, opportunities exist. Much like other markets, IFAs are unpredictable and determined by supply and demand. A common viewpoint is fewer clients want to pay for financial advice post-RDR.

There are also other options for consumers including low-cost Internet sites offering financial management.

Still, the most effective method for business expansion is acquiring the right client bank. With many IFAs going after fewer opportunities, goodwill and an orderly transition are a winning combination. Advertising, sponsoring and building sites is pricey and intangible.

A great number of principals are approaching the age of 60, their planned retirement age. Changes related to the RDR are also prompting many exits.

While more businesses will be marketed through January, 2013, quite a few will be exhausted. Their minimal recurring income will be reflected in their value.

The true value exists in what a product can do for a buyer. Purchasers holding out to get retiring principals will miss the action. Few would sell for a lower price when they can split a commission with an industry associate. Others would enlist the assistance of an authorized para-planner to advance their position in the firm.

An acquisition should ideally pay for itself within four years. Skillful buyers hone in on client banks, digest them rapidly, then continue to another with more resources and strength.

Additionally, they have a fantastic reference from a comfortably retired IFA that the deal went well, giving them an advantage when looking for other sellers.

Wishing you continued success,

Stephen Hagues is the founder and managing director of business brokers Retiring IFA. Click here to visit our website.

If you have any questions about this article, or about how we can help you with your current acquisition needs, contact us today! 01765 698699 acquisitions@retiringifa.co.uk

Business Thoughts

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HNW Client Bank – For Sale

Glasgow – Price: Offers Over £165,000

TURNOVER: £65,000, TRAIL: £55,000, CLIENT BANK: 50 active plus 50 GPP, FUNDS UNDER MANAGEMENT: £6.5 million

After being established in the industry for over 25 years this firm’s director is looking to exit the industry leaving you to service an active client bank of 50 individuals plus 50 GPPs with portfolios ranging from £200,000 to £500,000. Clients are predominantly based in Glasgow and the surrounding areas. The firm is looking to receive payments on a phased basis over a 12 - 24 month period. To find out more about this firm call now, quoting reference 48557.

Directly Authorised Firm – For Sale

Lincolnshire – Price: Offers Over £250,000

TURNOVER: £300,000 TRAIL: £80,000, FUNDS UNDER MANAGEMENT: £9,000,000, BUSINESS MIX: 50% Investment, 30% Pensions, 10% Mortgage, 10% protection, CLIENT BANK: 100 Active

A directly authorised and RDR ready practice with a bank of 2,600 clients 100 of which are active. This client bank was developed through walk in trade and referrals, 99% of clients are based in the Lincolnshire area. The IFA has had over 10 years experience within the industry and is available for a 6-month handover period. As well as the IFA firm you will also have the option to purchase a Mortgage Brokerage with a high street presence and GI agency with £30,000 in renewals. To find out more about this firm and organise a meeting get in contact now quoting reference 48496.

Referral based Client Bank – For Sale

Reading – Price: Offers Over £75,000

TURNOVER: £100,000, TRAIL: £25,000, CLIENT BANK: 100 active, FUNDS UNDER MANAGEMENT: £8 million

An IFA practice that is situated in Reading whose clients are based mainly in the areas of Reading, Newbury and Basingstoke. The clients have a good age spread and are mainly from the working and middle classes with the average portfolio being £75,000. New clients are brought in through referrals since it was established over 20 years ago. The company sends out a newsletter every 3 months to ensure a good relationship is maintained. To find out more about this firm call now, quoting reference 48555.

Loyal Client Bank – For Sale

South Sheffield / Worksop – Price: Offers Over £90,000

TURNOVER: £80,000, TRAIL: £30,000, CLIENT BANK: 100 active, FUNDS UNDER MANAGEMENT: £3million

A fantastic opportunity to purchase an IFA practice based in the South Sheffield and Worksop areas. Over the years the firm has developed an active client bank of 100 individuals, with an average age of 55 and above with the average portfolio being £60,000. New clients are brought in through referrals and recommendations from existing clients. To find out more about this firm call now, quoting reference 48559.

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