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Succession planning key to cut consolidation

Succession planning is crucial in avoiding further industry consolidation, a senior advisory head has warned.

Speaking to ifa, Guardian Advice head Simon Harris said that it was important for the advice industry to have succession strategies in place to avoid ongoing consolidation of independent practices.

“There is nothing sadder for me than seeing a practice being forced to sell without having succession planning in place,” Mr Harris said.

“Advisers put in a lot of work to build these successful practices and to not leverage that and get the best return on the effort possible is quite sad.

“Unfortunately, that’s when consolidation comes in and people don’t get rue value for their assets.”

Guardian Advice recently launched its Practice Equity Model and yesterday announced its first partnership under the deal with Western Australia-based practice Capital Managers.

The arrangement will see Guardian take an equity share of no more than 40 per cent of the businesses value, in order to help it transition to new ownership.


“I guess what differentiates our equity deal from others is that we take a minority share from the businesses, as we don’t want to be the controlling entity in financial planning businesses,” Mr Harris said.

“We acknowledge that experienced financial planners and those people running those businesses are better at it then us, but we do have complementary partnering skills that we are delivering.

“They run the business their way and we just get involved with them – as we would any of our practices – at a licensee level, where we provide them with licensee services.”

Mr Harris said that Guardian’s arrangement is crucial if the next generation are going to able to take over financial planning businesses from retiring baby boomers.

“What we’ve seen in our review of the marketplace is many of the baby boomers have been so successful over a number of years that the size and value of their businesses are quite substantial, yet we’ve got the younger generation that don’t have access to that capital,” Mr Harris said.

“That’s why it’s really important as an industry to find innovative solutions to help those younger advisers.”