How to sell your firm without really trying

Focus Financial now offers a succession plan that requires no planning; 'retirement insurance'

Nov 14, 2012 @ 4:25 pm

By Liz Skinner

Independent advisers who have not planned how they will pass on their business when they retire — or actually die while still running their firm — may now have a backstop.

Adviser aggregator Focus Financial Partners LLC is offering registered investment advisers a flexible succession planning strategy where the owner can set up the deal, but decide later whether to execute it.

“This is like retirement insurance,” said Rudy Adolf, founder and chief executive of Focus Financial. “It's like an option to do a deal.”

The service is aimed at firms managing between $50 million and $300 million in assets, he said.

The process begins with Focus examining how ready a firm is for succession and a transition to new owners. The goal is to have the owners formulate policies and make changes that would make the business more conducive to succession, Mr. Adolf said.

Heavily proprietary technology, for example, would be very difficult for another advisory firm to come in and take over the client portfolios, he said.

Focus Financial, whose firms manage about $52 billion in client assets, isn't charging for this initial diagnostic at this point, even though Mr. Adolf said even this initial step will provide real value to the RIA to prepare for succession.

The advisory firm would then choose a Focus partner and sign an agreement to have them manage their business once the principals decide to activate succession. The financial terms of the deal would be set in that agreement. Annually, firms would have to certify their transition plans were up to date and either side could terminate at any time, Mr. Adolf said.

Buckingham Asset Management, a partner of Focus Financial, signed such an agreement last week with owners of CLM Capital Management LLC in Maine, which until that deal had been one of the 75% of advisory firms without a succession plan.

“We believe we're solving one of the single biggest issues that the industry has,” Mr. Adolf said.

0
Comments

What do you think?

View comments

Recommended for you

Sponsored financial news

Featured video

Events

The power of data

Your clients have financial news and data at their fingertips, but donít know how to interpret it. Katy Gibson of Envestnet|Yodlee and Blake Kannady of Envestnet discuss the power of leveraging aggregated data.

Recommended Video

Path to growth

Latest news & opinion

Bond investors have more to worry about than a government shutdown

Inflation worries, international rates pushing Treasuries yields higher.

State measures to prevent elder financial abuse gaining steam

A growing number of states are looking to pass rules preventing exploitation of seniors.

Morgan Stanley reports a loss of advisers after exiting the protocol for broker recruiting

The firm said it lost 47 brokers in the fourth quarter, the most in any quarter of 2017.

Morgan Stanley's wealth management fees climb to all-time high

Improvement reflect firm's shift of more clients into fee-based accounts priced on asset levels, which boosts results as markets rise.

Legislation would make it harder for investors to sue mutual funds over high fees

A plaintiff would have to state in their initial complaint why fiduciary duty was breached, and then prove the violation with 'clear and convincing evidence.'

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print