Participating in No More Practice taught me a number of important lessons about improving practice value. Probably one of the most significant lessons for me was to be prepared.
My mentor, Robbie Bennetts, told me that if you’re selling an asset worth a lot of money, it’s a huge risk and investment for another party. Therefore, the more transparent you are about the numbers, the greater the chance of success.
I have changed my approach to business as a result and implemented a number of changes in my practice. The first thing I focus on is hiring the best emerging talent, as they help build a great culture and inevitably improve all facets of the business. The second factor I focus on is systemised processes, and the two objectives of any new process introduced at Financial Design for Life are to make our clients’ financial planning journey better and/or create greater efficiency, thus improving our ‘bottom line’. The third change in our business is to ‘know your path and walk it.’ Everyone in our team knows exactly where we are heading and what the destination looks like.
However, there have been some challenges in growing our practice. One of the major barriers to growth has been funding. I think banks are putting up barriers to entry, making it more difficult for new entrants to get into the advice market. Therefore, if there are fewer buyers (less competition) it is more difficult to get your desired purchase price. It’s not impossible, but just harder work.
Another challenge has been uncertainty. I think FOFA created enormous uncertainty for financial planning businesses due to the clumsy way it was handled. At one stage it was unclear what the future financial planning landscape would look like, so it was difficult to figure out a precise valuation for our business.
To make things easier, I would advise other practice owners to get help. Talk to experts who are specialists in this area because they can quickly help you avoid basic mistakes and potentially help you maximise your practice value. Furthermore, talk to advisers who have been through the experience. It can be easy to commentate when it’s not your money, so it’s important to talk to blokes like me who have bought and sold financial planning businesses. It’s a cliché, but it’s true: you can’t buy experience.
