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5 top tips if you are considering merging your financial planning practice

5 top tips if you are considering merging your financial planning practice

Pressure to scale up and grow continues to increase with many financial planning practices fighting tooth and nail to operate sustainably for the future.

Many practices have struggled to meet their expectations of growth and client profitability over the past few years. This is due to the ongoing legislative upheaval, the increased cost of providing advice, and the distraction and disruption wrought by the global pandemic.

Many practice owners that have gone it alone over the past few years feel exhausted and isolated, and are looking for ways to either generate growth, such as buying small client books, or potentially seeking to merge with like-minded practices, often with the encouragement of their licensee.

It is important to carefully consider the implications of merging your practice, and ensure that at the end of the day, the merge is not only in the best interests of your clients, but also aligns with your core beliefs and the culture of your practice.

Here are five tips to consider if you are thinking about merging your financial planning practice:

  1. Take the time to clearly understand what your medium to long-term objectives are for your practice. A merge with another practice might satisfy your short-term needs, however, in the medium and long term, you might find that it constrains how your practice will evolve and change.
  2. Understand the cultural fit. Don’t just pay lip service and agree on broad principles. It takes time to get to know each other and understand the differences and commonalities of each business. Your values should be aligned, and this is best understood by spending time together and witnessing them in practice.
  3. How much upheaval will the merger cause to both your clients, but also your team? If the practice you are seeking to merge with, is with another licensee, what hoops will you need to jump through if the merged business decides to maintain the alternative licensee? Of course, often, change is a positive; if the new licensee offers more efficient solutions, however, it pays to understand if the merge will benefit your business or potentially hinder it.
  4. Alignment in terms of your ideal client is critical. Synergy and efficiency can be gained by consolidating a service and approach which is tailored for a specific type of client. Alternatively, your ideal client profile might complement the merging practice which could potentially create new business opportunities. For example, if one practice focuses on late-stage accumulators, and the merging practice has an aged care focus, there could be potential for these accumulators to be supported in the aged care advice support for their elderly parents.
  5. Always have an agreed exit strategy and enter any merger with your eyes wide open. Commit to making it work but ensure that your clients and team are always at the front of your mind.

Like most big business decisions, merging your practice requires careful consideration and in-depth due diligence to ensure that the decision you make is the best one for you, your clients, and your team. Reach out to those that have been in your shoes before and understand the lessons they learnt through the process. Understand if it is the right next step for you, and back yourself!

Michael Gershkov, national practice manager (VIC), Lifespan Financial Planning

Neil Griffiths

Neil Griffiths

Neil is the Deputy Editor of the wealth titles, including ifa and InvestorDaily.

Neil is also the host of the ifa show podcast.