Advisers face succession planning disaster
Older accountants and financial planners looking to exit the industry due to personal and financial health issues are increasingly accepting "fire sale" prices for their businesses, especially those with out-dated business models, according to Paul Tynan.
Echoing a situation similar to that faced by older risk advisers, the Connect Financial Services Brokers chief executive observed that practitioners waiting for a buyer until their late 60s and 70s were forced to sell at an undesired price due to ill health or death.
"Never before have I seen so many buyers trying to sell at such short notice and retirement is the overwhelming reason for the sales," Tynan said.
Furthermore, Tynan warned business owners that were reluctant to adapt and modernise but were looking for an emergency exit were heading towards "succession planning disaster".
"Not all Baby Boomer business owners have been sitting on their hands and they have responded with business models attune to the new era of professionalism and provision of advice services in the 21st century," Tynan said.
"But there is definitely a significant sub set within this demographic with resistance to change firmly ingrained in their DNA and have been consistent reluctant adapters to modernise."
While some encouraged staff buyout of businesses as a solution, the next generation of potential buyers were burdened with personal debt including university education, home loan repayments, and expenses of their children, and were therefore not in a position to buy businesses.
"However, businesses that have been structured on corporate client centric service and advice models with good processes, latest technology and adherence to the highest standards of compliance are always in demand and receive premium offers," Tynan said.
Tynan also warned that the accounting and financial planning industry associations have thus far failed to communicate the need to prepare practices for exit and succession. He added that conferences and workshops were insufficient to deliver the message.
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