Last Updated on Dec 24, 2019 by James W
Buying an IFA practice is a great way to hit the floor running if you’re a new adviser or get more assets if you’re looking for growth. While it can be a great option to many, it doesn’t make sense for everyone. Not only that, but the kind of firm that you buy and how much you pay for it will also have an influence on how profitable it would be as a decision. Here are a few things you should know before you buy an IFA practice.
Decide Right now if You’re Going to Go the Independent or Restricted Route
While in your heart of hearts, you may want to remain independent, you should consider the restricted model. It could have many advantages that would be beneficial to your operation. It could also be a better option from a regulatory standpoint.
Don’t Try to Get One Over the Seller
In the best of all worlds, a good deal is when both sides are satisfied, but none feel too happy. That might seem like a strange idea, but if you feel like you made a steal, the other side might feel like they’ve been cheated. This could lead to many issues later on since they still have some control over the transaction and contact with clients.
Try to Buy the Assets, not the Liabilities
Some will want to buy the firm outright because they might get some benefits from it. For instance, buying the firm could qualify them for tax relief. But that also means that you’ll be carrying the firm’s liabilities as well. So, if you’re going to acquire a limited company, try to draft a contract that will exclude any type of liability.
Work with the Right Team
You should also consider working with a third party in order to find the right firm for you. Working with a broker who has access to IFA retirement opportunities could help you find a firm depending on your set criteria. They will be able to pre-screen the offers and connect you with buyers. A good broker will also be able to help during the negotiation and transfer process.
Not only that, but they could also help with due diligence as well. Too many firms make judgement errors during the acquisition phase. Working with a good broker will allow you to get a clearer picture of the company and possible issues.
Make Sure that you are a Fit
Never forget that you’ll be working with people and that you should be a fit not only with clients but with your new employees as well. If you and the old management have completely different styles and strategies, it might not sit well with your team, and you might end up losing some of them as well as clients in the process.
All these tips should allow you to find a great practice and make sure that it will continue to be profitable for you. Make sure that you follow these tips to the letter, and also make sure that you look at the decision from many aspects before you make your final choice.