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Not all wealth management firms, but most of them should stop this silly behavior.  Let’s face it, a sale where you only get 30% down and have to either hold paper or have an earn out for the rest is really not a sale.  Or, at least in my opinion it’s not a sale.

There is a much better strategy for an eventual exit from your business.  (And, all people will eventually leave their business.)  This strategy is what I call a slow liquidation.  This liquidation could take years to accomplish, but it’s a better strategy than selling for 30% down.

Start with developing your niche.  Preparing for a slow liquidation starts with identifying and developing a niche.  Look at your present book of business and decide which clients are your favorites.  See what they have in common and concentrate on finding more of these types of people.

Find a new home for most of your clients.  When you reach your mid 60’s, you will want to start slowing down.  (Some of you will want to start before then)  You will want to reduce your book of business from your present client base to no more than twenty-five clients. 

Most of us would not have to work full time if we only had twenty-five clients to service.   At the same time, most of us have more than twenty-five clients we service today.  You will need to find a new home for those clients you decide not to keep.

Find a firm to take over your practice.  As you age, your clients are likely to ask you what your plan is if you die or become disabled.  Having a good answer for this question not only is important for your practice today, but allows for a plan that covers the eventual liquidation of your practice.

The goal is to transfer your clients, not get a lot of money.  I suggest that you agree to a low amount, probably the 30% you would have gotten down on the sale of your business.

This firm might also be a good place to transfer the clients you need to shed from your practice.  Again, don’t expect to get much money for these clients.  The main purpose is to reduce the size of your business.

When you enter your 70’s, reduce your client list to ten.  You’re probably at the tail end of your career.  Keeping ten good clients can provide enough income that will help you cover some retirement expenses.  More importantly, it will help you keep your mind active.

At this point in your career, you will likely want to only service clients and not run a business.  Attaching yourself to the person who will eventually take these clients over makes sense.  You could work through their RIA and if necessary join their broker/dealer.

Using this strategy as an exit plan for your planning firm might be a good one.  It allows you to maintain reasonably good income till you decide it’s time to really slow down.

In the meantime, you’re able to enjoy the cash flow from your business instead of taking a huge risk from hoping a buyer actually pays you the earn out and or the paper you would have to hold.  What do you think about this strategy?  Please contact me at Jpatrick@stage2planning.com or click here to set a time for us to talk.

Josh Patrick

Click on the button below to get our mind map on how to develop a passive ownership business.  Many of the steps that are needed for this activity would be useful in a liquidation strategy in your business.


Securities and Investment Advisory Services offered through NFP Securities, Inc. (NFPSI), Member FINRA/SIPC. Stage 2 Planning Partners and NFPSI are not affiliated.

This article is published for residents of the United States only.  Registered Representatives and Investment Adviser Representatives of NFP Securities, Inc. may only conduct business with residents of the states and jurisdictions in which they are properly registered.  Therefore, a response to a request for information may be delayed.  Not all of the products and services referenced on this site are available in every state and through every representative or advisor listed.


Topics: retirement planning, retirement, business exit planning, liquidation, selling, niche management, niche

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