1. Wealth Advisory Solutions
Independent Advisor Platform

2. Wealth Advisory Solutions Independent Advisor Platform
Transition Support
Compliance
Software/ IT
Administrative Support
Business Continuity Planning
Succession Planning

3. Wealth Advisory Solutions Business Continuity Planning
Catastrophic Plan (Proverbial Bus Scenario)
Critical for Sole Practitioners and Key Relationship Personnel
Advisor Can No Longer Fulfill Their Duties (Death or Disability)
What Happens to Your Clients? Your Staff? Your Family?
Business Continuity Plan Provides
Peace of Mind
Client Retention
Organized Transition
Monetary Benefit to Family

4. Wealth Advisory Solutions Succession Planning
A process, not a transaction
Key Considerations
Why are you looking to sell?
Internal or External Succession?
What is your Timeframe?
Primary Objectives of a Succession Plan
Create an exit plan for the owner
Ensure clients are taken care of
Secure the firms future
19% of RIAs that generate between $150,000- $500,000 in revenue have a formal succession plan

5. Practice Valuation & 10 Steps To Prepare Your Practice To Sell
Anthony Whitbeck, CFP, CLU
CEO of Key Management Group

6. Key Management Group Services
Transitioning
Team Practices
CEO Thinking
Brand Building
Protecting Equity
Escrow
All of KMG’s Services have been carefully designed to move advisor’s up the productivity curve and overcome the obstacles that are preventing maximum success.
Deal Making Service
Advisors w/Support
Advisor Legacy
Organization
Systems
Delegation
Succession Planning
AFA Analysis
Finding the Right Successor
Deal Negotiation
Transitioning
Solo Advisors
Acquisition Consulting
Client Service
Marketing
Everything!
Practice Protection
Human Resources
Specialized Assessments
Business Valuations
Online Assessment
In-Depth Assessment
Practice Protection
Human Resources
Practice Management
Guardian/Continuity Planning
Financial Planning
Case Preparation
Executive Coaching

7. Practice Valuation

8. Why Financial Advisors Get Valuations
Financial Advisors seek professional Business Valuations for many reasons, the most common are:
Charting the value of your practice to measure growth
Before entering a Buy/Sell Agreement
Before dividing the practice between key members
To facilitate succession planning discussions
Acquiring a practice
Securing bank financing
And more…

9. Types of Valuations
The reason WHY you are getting a valuation will determine the type of valuation that you need. The terminology and definitions are defined by American Institute of Certified Public Accounts (AICPA).
Key Management Group offers all three types of valuations, plus special valuations for:
OSJs
Other Industries
Divorce Proceedings
Estate and Gift Tax
Owner Disputes
Partnership Equity Agreements
We are a trusted valuation provider for bank partners:
Live Oak Bank
PPC Loan
Oak Street Funding
Salt Creek
Succession Lending
Three Types of Valuations
Calculation Engagement
Most common
Calculated Value
Business Valuation
More in depth
Conclusion of Value
Other Appraisal
Least Common
Specific Situation

10. Valuations can range greatly based on several factors –
“rule of thumb” metrics are inaccurate and unreliable
There’s almost $400,000 price difference depending upon whether it is a top 20% or bottom 20% practice.
Numbers based on approximately 300 valuations performed in

11. How Is Your Practice Value Determined? Continuity Planning Options
Do you know the factors that influence the value of your practice?
Market Approach
Income Approach
Value based primarily on business operations
Team
Systems
P&L
Discount Rate utilizing various risk factors inherent in your practice
Value based primarily on the client group
Quality of revenue
Client age
Asset Velocity
Compared to benchmark
One of the biggest barriers to succession planning is knowing who you would want to take over your practice.

12. What Drives Value in Your Practice? Continuity Planning Options
Client Segmentation
Item
Basic Client
(Below $100k AUM)
High Value Client
($100k to $500k AUM)
Affluent Client
($500k + AUM)
# of Clients
44%
38%
18%
% of Advisor’s GDC 7%
32%
62%
Average Age 53 63 65
Average AUM
$34,739
$247,445
$1,248,931
Average GDC
$401
$2,217
$8,654
One of the biggest barriers to succession planning is knowing who you would want to take over your practice.

13. 2018 Year-End Valuation Metrics
Best Worst
Best Worst
Best Worst
Worst Best
*All data presented based on a sample of 477 valuations run in 2017

14. What Drive Practice Value – Up and Down?
Top 3 Metrics That Drive Practice Value Up:
Recurring Revenue
Operating Profit
Revenue from High Value Clients
Top 3 Metrics That Drive Practice Value Down:
Client Age
Number of Low Value Clients
Number of Professionals in Firm
*All data presented based on a sample of 200 valuations run in 2018

15. “Calculation Engagement”
Getting a Valuation
A valuation will help you manage the equity in your practice and help you prepare months or years in advance of a sale.
Partner Firms:
$1,295
“Calculation Engagement”
What you get:
Dual Methods
Market Value Analysis
Earnings-Based Analysis
Customized assumptions based on key practice metrics
60-Minute Consultation
Review of valuation
Actionable insights to achieve your goals
$ 895

16. To purchase an assessment – visit: www.keymanagementgrp.com
Easy to buy online
Get instructions ed right away
Simple data collection process
Results usually delivered in about a week
1:1 Consultation with an M&A Experts to review

17. 10 STEPS TO PREPARE YOUR PRACTICE FOR SALE
Toll-free:

18. SELLING A PRACTICE IS AN EMOTIONAL JOURNEY THAT TAKES CAREFUL PREPARATION.
Start preparation as far in advance as possible to ensure a smooth transition.
The clearer you are about why, how, what, and in what way you are selling, the higher likelihood of success.
Sellers Checklist
1. Start with ‘why’
2. Know your worth
3. Tell your story
4. Take inventory
5. Handle attrition
6. Segment & communicate
7. Log opportunities
8. List major expenses
9. Record business services
10. Make an org chart

19. 1. START WITH WHY Have a clear understanding of why you are selling.
Complete a written statement of why you are selling and what your post-work goals are. Plan to share these statements with prospective buyers.

20. 2. KNOW YOUR WORTH Complete a formal practice valuation.
This is a critical step to establish an expert opinion of the value of your practice and to provide many other data points for making informed decisions about the sale.

21. 3. TELL YOUR STORY
Write a message to buyer prospects. Write 1-2 paragraphs for each item:
Description of your practice, yourself, and the type of buyer that you want.

22. 4. TAKE INVENTORY
Take inventory of client deliverables; especially financial plans that have been paid for but not delivered.

23. 5. HANDLE ATTRITION RISKS
Aging clients represents a risk of client/asset attrition. Demonstrating generational planning will reduce the risk perceived by the buyer.
Create a simple report for each ‘A’ client indicating ‘yes’ or ‘no’ for generational planning with a note about who is involved (children, etc.)

24. 6. SEGMENT AND COMMUNICATE
Segment clients for your transition communication and meeting strategy.
Talk to clients early about your transition plan and reassure them of the process.

25. 7. LOG FUTURE OPPORTUNITIES
Document future opportunities with existing clients.
These should be well-confirmed opportunities or work-in-progress.

26. 8. LIST MAJOR EXPENSES
Create a detailed outline of all transferrable expenses.
This should list meaningful expenses like office lease (including terms), staff compensation, marketing, etc.

27. 9. RECORD BUSINESS SERVICES
Create a detailed list of all business/office services you subscribe to, their contact information and any terms of service.
Include items like phone service, equipment leases, etc.

28. 10. COMMUNICATE YOUR ORG CHART
Advisor
Licensed Staff
Unlicensed Staff
Associate Advisor
Complete a staff overview document.
This should include all staff, titles, duties, compensation, and your recommendations for retention.

29. Average time frame is 4 months
Overview of how we help advisors find the right buyer on our Advisor Legacy™ platform.
INITIAL CONSULTATION
IDENTIFY PROSPECTS
GATHER DATA
INVITE BIDS
CONDUCT INTERVIEWS
MAKE DEAL
Average time frame is 4 months
Advisor Legacy fees range from 2.00% % of the practices trailing revenue.

30. Wealth Advisory Solutions Key Take-Aways
Implementing a Business Continuity Plan is Critical for Independent Advisors
Understand What Drives the Value of Your Practice
Succession Planning is a Process- Important Considerations if You Are Thinking About a Transition

31. Questions? Wealth Advisory Solutions Ty Needler Ty@EnvisionRIA.com
Key Management Group
Anthony Whitbeck, CFP, CLU

32. Schedule your free 30-minute consultation today or take our free online assessment:
Anthony Whitbeck, CFP, CLU
CEO, Key Management Group O: