Partner Article

Financial advisors need to act now

Research shows financial advisors who plan to fund retirement with the sale of their firm may struggle, b****ut the Maximizer Services report also outlines how a wealth management business can build a more saleable book of business long before cashing out

Vancouver, Canada ( 16th June 2015) – Financial advisors face a ticking time bomb when it comes to retirement and need to prepare now for the sale of their wealth management practices down the road, according to a new report from Maximizer Services, a leading provider of Customer Relationship Management (CRM) software.

The Maximizer research, based on a survey of more than 900 financial advisors across Canada and the United States, showed that 60% are already over age 50 (57% in Canada and 68% in the US). The survey also revealed close to 30% of all advisors plan to retire in the next 10 years and more than half aim to give up work within the next 15 years (53% in Canada and 50% in the US).

The findings indicate that, with a glut of solo wealth management practices and partnerships expected to be up for sale when the majority of owners approach retirement age, financial advisors will find themselves in a highly competitive sellers’ market in 10-15 years. The study argues that, to ensure advisors adequately fund retirement with the sale of their business, they need to ensure they use every tool at their disposal, especially CRM, to build a more valuable book of business.

The whitepaper, Building a Saleable Wealth Management Business, notes that the majority of financial advisors don’t have an exit strategy in place and discusses how they can start now to pave the way for the seamless and lucrative sale of their firm when the time comes. In the report, Maximizer discusses the importance of professionalizing a wealth management practice by establishing operations, procedures and infrastructure that are standardized and systemized, so the business functions in the same way and performs at the same level regardless of who owns it.

The report shows that CRM is critical to engraining correct and repeatable processes in the fabric of a wealth management practice. Maximizer explains that an effectively configured CRM system will ensure that key aspects of the business are quantifiable and verified, including client records, target management, Assets under Management (AUM) and revenue.

The whitepaper emphasizes the importance of having a book of business that is fully captured and updatable, providing detailed client profiles and records. The study shows CRM is critical to building a transparent book of business that is a provable asset worth buying at its optimum price. This requires a fully configured CRM platform that uses standard wealth management industry terms, enables automation of workflow, and ensures complete client records are maintained.

In the paper, Maximizer says that CRM designed specifically for wealth management practices is the best solution for many firms, especially those that do not have the technical expertise to thoroughly customize their CRM. According to the report, wealth management-specific CRM solutions need to:

be adaptable to changing circumstances, such as business growth and compliance changes; have 90% of the fields, searches, views and workflows needed to run a financial advisor practice already in place; permit web access and mobile device use; feature Social CRM capability.

John Easton, Director, Strategic Accounts at Maximizer Services, says: “With so many financial planners looking to retire at around the same time, anyone relying on the sale of their firm and its book of business needs to start building the value right now. To do that, you need a CRM solution that fits the business. Having the right CRM demonstrates to potential buyers that your firm’s processes are systemized and transparent – and in good working order. You can show who the clients are and the depth of information that you hold on each, and demonstrate that this knowledge is easily accessible and fully transferable. It can’t be in filing cabinets and your head.”

Easton, who specializes in wealth management solutions, continues: “Many smaller financial advisors seem blind to technology and CRM opportunities, seeing these as tools for bigger players. If you are an upcoming firm aiming to develop your practice ahead of a sale, you need to ignore preconceptions and look at what investing in CRM can do – especially when it comes to creating a stronger book of business, the jewel in the crown for any financial advisor. CRM not only improves efficiency and profitability, it bulletproofs your business by ensuring detailed record-keeping that protects you – and a future buyer – from client service cases and compliance issues.”

This was posted in Bdaily's Members' News section by Maximizer Services .