PA360 Digital: Why streamlining before selling-up is essential

Speaking at PA360 Digital on Wednesday (7 October) Sanlam's Lawrence Cook said getting a business ship-shape ahead of sale was a project worth investing in.

The head of UK intermediary distribution said what might be important to an adviser, such as the adviser charge, could be secondary to prospective buyers who may be more interested in assets under management (AUM).

"When will the price be right? A lot of IFAs will focus on their adviser charge and why wouldn't you?

"But remember to focus on what the buyer wants. If the buyer has its own investment solutions they will be interested in AUM. The adviser charge compared to running of the assets is secondary.

"Whatever your business plan is and whenever you plan to exit from that business do what adds value. If it is in your business plan it ought to be important and if it is important it should be adding value"

He also said prospective buyers will assess the potential integration period for firms and advisers should keep this in mind if selling up.

"Any business pre- and post-sale will be easier if it is streamlined. Make sure you are using technology where possible and outsourcing where you can to focus on financial planning.

"Post-sale the acquirer will be thinking about the two years post-sale. Clearly, if your business is already streamlined it will be an easier post-acquisition period," he explained.

Lawrence Cook: Managing your firm's investment proposition

Cook ran digital delegates through the ‘GROW' model, ‘SMART' objectives and ‘Six Hats' model as methods to employ when getting an adviser firm's "house in order" ahead of sale.

Red carpet

Cook also said the business owners needed to fully focus on the client proposition.

He said to clients should feel like they are walking on a red carpet in terms of service and they "are willing to pay for that service". However, he added: "Clients are willing to pay for benefits. They don't want to pay for administration. Do clients care if you fitted the carpet?

"Administration is necessary but not the key value to the client. Outsource where you can to deliver financial planning value."

He said everyone across the sector had been through a difficult period with the coronavirus pandemic and market volatility.

He urged advisers to review their business strategy and implement measurable change in their businesses.

"Focus on what clients' value. What they want is someone that they trust with their money. That is why they are willing to pay. There needs to be more and more focus on that with less on the administrative functions of delivering financial advice."

Cook added that outsourcing was becoming more of a support process rather than a takeover for advice outfits.

"Firms that have spent a long time developing their own proposition and brand do not want to just give that away. We have put our arms around the IFA to help support their own brand and proposition.

"If you can build a bespoke and specific outsourcing option to the IFA it feels like ‘insourcing'. We hear you are supporting the brand that they have spent years building up."

All PA360 Digital sessions will be available on-demand shortly. 

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• Topics
• Your profession
• Business models
• Sanlam
• Lawrence Cook
• IFA
• Selling-up
• PA360 Digital
• outsourcing