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Practice Management > Succession Planning

You Advise Your Clients to Sell High. Why Not Take Your Own Advice?

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What You Need to Know

  • Holding on to your practice for too long can cost you and your family hundreds of thousands of dollars.
  • Thinking ahead is the best option, as taxes may be going up.
  • More advisors are working out transitioning plans with acquirers so they can still work with the firm.

You’ve built your wealth management practice from the ground up. Taking some or all of your chips off the table after years of dedication may seem difficult, especially while business is booming. However, holding on for too long can cause more harm than good — and potentially cost you and your family hundreds of thousands of hard-earned dollars.

As an entrepreneur, I’ve sat on both sides of the table and understand the psychological obstacles of monetizing your business and giving up total control of “your baby.”

You built it from scratch and worked long, hard hours making it successful — the idea of making such a drastic change can be overwhelming. From experience, I can tell you that facing the inevitable head-on will bring you, your clients and your staff more peace of mind and monetary reward in the long run.

Wealth management firm owners must recognize the right time to sell, and for many who have spent decades building their businesses, that time is now. Here’s why the current environment presents a great opportunity to put the for-sale sign on your firm.

Taxes are the lowest they’ve ever been.

And they’re not headed any lower with a new administration in command. President Joe Biden has proposed increasing the corporate income tax rate from 21% to 28% and the long-term capital gains tax rate from 20% to 39.6% on income above $1 million. Putting your business on the market ahead of forthcoming tax hikes could prevent its profits and value from deteriorating in the future.

The market is at an all-time high.

After nose diving in March 2020, the market has staged an incredible rebound and is back to historically high levels. Don’t push your luck though. No one knows when the next downturn will occur, and it may not be as short-lived as the last. For instance, it took eight years for the S&P 500 to recover following the 2000 dot-com bubble burst and about six years for the S&P 500 to recoup its losses after the 2008 market crash.

The point is, wouldn’t you rather sell your business now while valuations are sky-high and buyers are willing to pay top dollar? If you sell too early, you may miss a few points. If you sell too late, however, you may miss out astronomically and have to wait years for your business to fully bounce back.

Competition is heating up.

Last year was marked by widespread consolidation in the wealth management industry, and this trend is only expected to continue. Larger consolidators are acquiring and merging with smaller firms at a record pace, making it increasingly difficult for smaller shops to stand out against their counterparts who have more staff, resources and expertise.

With this in mind, it may make sense to sell before competition reaches a boil, and you can no longer keep pace with the rapidly evolving wealth management landscape.

Also, keep in mind that earnouts on the back end of a sale are typically two to four years, so it’s critical to plan ahead and monetize your business when momentum is in your favor. Even if you undergo an extensive buyer search and ultimately don’t pull the trigger, you’ll at least understand the marketplace and be well-equipped for when you are ready to sell.

Furthermore, just because you sell your business doesn’t mean you have to walk away entirely. More financial advisors are transitioning some or all of their ownership while still being heavily involved with clients and day-to-day operations.

It’s the best of both worlds — you can reap the monetary rewards of your business today and still get to do what you love. Best of all, you can do it on your own terms and do the parts of the job you enjoy while working with your acquirer to take over the parts you don’t.

The bottom line is it’s never too early to start planning for the future. Just as you advise clients to sell when the market is high and the timing is right, you should consider doing the same for you and your business.


Stuart Silverman is the president of Bluespring Wealth Partners, a company focused exclusively on acquiring registered investment adviser and wealth management firms through streamlined and unique succession strategies.