In Focus: Modern financial planner  

Our IFA targets need to start planning their exit years in advance

Tim Whiting

Tim Whiting

Since Timothy James & Partners was established in 1995, we have purchased four independent financial advisers through various phases of our business cycle.

We have invested in our brand to attract new clients and referrals and, having created a structure with surplus capacity, we are always considering firms to buy.

But there are certain things we look for in target IFA firms.

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Timothy James & Partners is valued on an earnings before interest, tax, depreciation and amortisation basis and therefore we consider the potential cost of running the new income streams and client base of a potential target firm. How much support do they need? How much additional professional indemnity cover? How much office space for the new team? 

The type of businesses that are attracted to Timothy James & Partners are those that put their clients’ interests first: they want to know that their clients will be looked after over the long-term by a truly independent financial adviser. 

We are not a consolidator, and we have no desire to ever become restricted. We wish to remain independent, acting on behalf of the clients making sure they have the best and most suitable advice in respect of platforms, solutions, investment services and charging structures. 

We require the retiring IFA to have an ambassadorial role for a two-year period to ensure the clients feel that the retiring consultant has handed the ‘baton’ over to the chosen consultant at Timothy James & Partners.

As a relationship and service-based business, we put forward four qualified and experienced Timothy James & Partners consultants, both male and female, so that the retiring IFA can decide which personality best suits each client. 

In most transactions, we look to leave clients’ platforms, investment services and charging structures the same for a two-year period as they get to know their new consultant and recover from the ‘shock’ of their long-term trusted adviser retiring or moving on.

We would only change any existing arrangements when it is suitable for the client and with their agreement. 

Tips for those retiring:

I think that you need to be clear that you do actually want to sell your business and you have something planned that is exciting and thought out.

We want to pay a fair price for the business to reflect 10-20 years' of hard work. What we do not want to do is start the process only to discover that the directors do not actually want to retire or move on after all. 

We would also recommend that you start thinking about this journey a few years in advance of when you want to leave. This is because we – or any other potential purchaser – will spend time reaching agreed heads of terms before starting the due diligence.