The cobbler’s shoes: Are you neglecting to form a robust exit plan?

Did you ever hear the old adage about the cobbler’s shoes? Believed to originate from Spain, it goes: “The cobbler’s children have no shoes”.

The saying emphasises the fact that when someone works in a specific profession, often they haven’t the time or patience to do the job for themselves. Picture a mechanic driving a car that needs an oil change, or a masseuse in desperate need of a massage!

Over the years, we’ve found this to be true for financial planners, particularly when it comes to selling a firm at the end of your career.

While you spend your life talking to your clients about the importance of a robust financial plan, you might reach your 50s and realise you don’t have one of your own – or, that the one you set out years ago no longer fits your goals.

If that sounds like you, stick around. We’re here to help you line your business up for the perfect exit.

It now takes up to 5 years to sell an advice business – now is the time to start planning

The exit landscape has changed significantly over the past few years. While it used to be much easier to sell a business, now it’s a buyer’s market and some advice businesses take up to five years to sell. And, with so many IFAs retiring in the coming years, that isn’t likely to change any time soon.

So, if you’re approaching retirement age and haven’t started thinking about how you’ll exit, now is the time to take it seriously. You might want to think about:

• Your administrative organisation (more on this in the next section)
• The kind of organisation you’d like to sell your business to
• How your financial plan will look once you’ve retired
• The ideal timeline for a sale.

Carefully considering these points is a great place to start.

Meticulous documentation is crucial. Is your business attractive on paper?

You may remember media headlines earlier in 2024 covering issues that arose when St James’ Place (SJP) was subject to an initial review of client records.

When their client servicing records were found insufficient by the FCA, SJP was required to refund around £436 million to customers who were affected. As a result, the company’s share price dived to an 11-year low, Money Marketing reports.

With this albeit extreme example in mind, it is crucial to have your ducks in a row before you set your exit plans in motion.

These include:

• Ensuring you’ve been meticulous in documenting the last five to seven years of client servicing, especially when it comes to annual client reviews
• Having clear financial records to present to potential buyers
• Making sure you’re performing due diligence and acting compliantly in line with the Consumer Duty.

In essence, these actions cement your business’s reputation as a responsible, well-run, efficient, and compliant advice firm that any buyer would be lucky to absorb.

If you’ve fallen behind on your administrative responsibilities, getting back on track should be your number one priority before you explore exit options.

We’ll help you achieve the sale you deserve

If your advice business falls into the “cobbler’s children have no shoes” category, you’re not alone.

At Melo, we’ll form a relationship with you and the key people in your business, helping to build an exit plan that falls in line with your ambitions.

If your business faces complaints, regulatory scrutiny, or any other bumps in the road, our experts will help you place it in a favourable position to ride them out smoothly. And when you do exit, you’ll benefit from our continued support for as long as you need it.

Drop us a line at hello@melo.co.uk or call 0113 4656 111 for a chat.