Financial adviser and practice principal Anne Graham recently went out on her own, separating from the accounting practice she operated her financial advice business under. It was a big decision but one she wishes she made sooner. Here is her story.
1 What spurred you to split from your old practice?
I had a business plan which was that in 10 years, I wanted to own my own business and work with people who wanted to be in the business.
At our last directors’ meeting describing the business’ strategy choices, it made me think about my 10-year-plan.
I owned the financial planning business with the partners in the accounting practice where I worked. It had recently become 40/60 – I was the minority shareholder and I was looking at my work and looking at who gets the benefit.
I realised I finally had the confidence to back myself. I also had a loyalty to my former practice who I had been with for 15 years.
People said afterwards, you should have made this move five years’ ago.
The practice itself hadn’t changed, our ambitions changed and we could see the possibilities for it.
2 When did you make the decision and how long did it take you to act?
I decided six months before I notified the business, which was 18 months ago. I said I would either buy them out or they could buy me out. I had the sum prepared for what I was going to pay. Some weeks later, an offer was made by the business to buy me out.
I already had legal advice before the buyout happened (about our employment agreements and shareholder agreements) because I didn’t know if they would sell shares to us or the other way around. I had two options I needed to research.
3 What were the top five things you needed to consider for the move?
- Name for the new business
- IT requirements and set up
- Dealer group – did it still meet requirements
- PR/marketing advice on how to inform clients
It was also important that my team didn’t find out until we were ready because of the destabilising influence the change might make. We didn’t know if the old business was going to buy us out ... that we might have to leave that day.
The valuation of the business had been already done as I had to be prepared with numbers if we were going to buy them out.
Also, I had to make sure we had the ability to buy them out.
It took a good three months to work through all of this.
4 Where did you go for advice?
The lawyers we asked were legal friends who would refer us to various specialists to help value the business, and review the agreements.
5 What actually happened?
The partners of our former business said that they’d buy us out initially, they then thought about how they would run the business. There were a couple of things we needed to discuss. Even if they kept the business – it wasn’t worth as much without the key adviser, which was me. We had had the business valued externally one-to-two years previously and that valuation was updated with current figures.
Three weeks after the initial decision to buy my shares, they reconsidered and agreed to sell their shares to me.
Contractually they agreed on an amount – all upfront. Price wasn’t an issue.
Initially they thought we wouldn’t have to move offices, however that changed and the main issue became for us to find new premises. It took time to find premises and then have them fitted out.
It was important we didn’t announce the change to clients until we moved. We told a couple of key clients confidentially and they gave us feedback – they needed parking, no steps. Younger advisers might not think of that, but that’s not our client base.
The IT was fine – we got new providers and kept them in the loop from the beginning.
We didn’t change dealer groups so this was never an issue.
6 Did you have any big surprises?
Things take longer than you think. Factor in a buffer.
Someone might leave – surprises like that happen and waste a lot of time in changing contracts, insurances etc.
Moving offices is like moving house – you need to make sure you have everything you need.
Redirecting mail and small issues like this may be harder than you think – factor in things like this as potential disruptions to your business.
Phones can be another issue, which can prove more difficult than anticipated.
The biggest one was not understanding how much energy the whole process would consume. There can be emotion in helping people move – staff and clients. It’s about managing change for staff and clients.
We lost one member of staff unexpectedly and another a couple of months later. We factored in these risks. So far clients have been great.
7 What might you have done differently in hindsight?
We probably would have done it in a shorter timeframe.
8 Any advice for others thinking about a similar move?
I had lots of peers to speak to in financial planning. Speak to people you respect and run ideas past them because you will forget something. Don’t doubt yourself. It wasn’t make or break for us but if you have these risks it may be different for you financially and you should pay very close attention to the numbers.
1. CoreData What’s on Advisers’ Minds in 2016 White Paper, May 2016.
2. CoreData/StatePlus Financial Advice in the Digital Age White Paper, December 2015
3. BT Panorama Managed Portfolios White Paper, August 2015
Information current as at 1 May 2016. © BT Financial Group - A Division of Westpac Banking Corporation. This document contains material provided directly by third parties and is given in good faith and has been derived from sources believed to be accurate at its issue date. It should not be considered a comprehensive statement on any matter nor relied upon as such. Before acting on this information, you should consider its appropriateness having regard to your objectives, financial situation and needs.