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To successfully sell a financial planning business, start planning for the transition well in advance, say Rebecca and John Horwood, partners at the Horwood Team at Richardson GMP.

For retiring financial advisors, selling one’s book of business is an art form. Finding the right buyer, achieving proper value, and identifying the right time to sell each comes with their own set of challenges.

Rebecca Horwood and her husband, John Horwood, partners at the Horwood Team at Richardson GMP in Toronto, conquered this a number of years ago. Together, they crafted a plan to transition a portion of their wealth to an advisor on their team who already had a strong book of business.

“We said look, we’re going to transition $50-million of clients’ assets to you,” she said. “We cut the bottom part of our book by $50-million and transitioned them to him. And then he paid us a percentage for five years.”

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Ms. Horwood did the same with several other advisors as the wealth she managed continued to accumulate, despite transitioning a fraction of it to someone else. And with each assistant to whom she transitioned the management of her clients’ wealth assets, she set goals for them to multiply the funds – a tactic which was ultimately successful.

“He doubled the practice through the prospects, and he’s on his own, and he is running an incredible practice of about $150-million,” Ms. Horwood said of one young advisor to whom she moved clients’ assets.

Ms. Horwood’s success is a testament to her ability to pull off something with which many advisors struggle. With tales from her own transition in mind, she sat down with The Globe and Mail to share five tips for seamlessly selling a book of business.

Create retirement goals and (at least) a five-year plan

According to Ms. Horwood, the first step to successfully selling a book of business is to plan for it well in advance.

“Have a long-term business plan, and your goal, that should already be there: ‘I’m planning to retire at X, Y, Z,’ ” she says. “You don’t want to say, ‘Oh, I don’t think I ever want to sell the business,’ or ‘Oh yeah, I want to sell my business next year.’ Well, I’m laughing about that, because that’s certainly not enough time. You need to really set timelines.”

Set your retirement timeline, and stick to it

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Ms. Horwood says it’s not uncommon for retiring advisors to change their minds about selling their book, even after they’ve established a clear plan to do so. To Ms. Horwood, this is unfair to both the buyer in question and to the clients whose assets are being moved.

“They say, ‘I’m going to sell my practice to you guys,’ ... and then the person changes their mind, they say, “Oh no, I’m going to work on for another client.’ Well, that’s wrong, don’t hold that carrot in front of a person. You have to be committed, you have to follow through.”

Commit to helping the buyer take over your business

Once you’ve committed to transitioning wealth to a younger advisor, it’s important to remain relatively hands-on throughout the transition process.

“If you want to sell your business, you don’t just dump it on somebody,” Ms. Horwood says. Rather, transitioning advisors should be around to “help that person if they need help with the client.”

This could involve taking advisors for coffee, answering questions, and helping out with emergencies, should they pop up.

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“At a second, we would be there to still help that person if they need help with the client,” she says, though she notes that it’s still important to not get involved in the day-to-day workings in business.

Helping new advisors should be the expectation, Ms. Horwood says. She suggests all advisors ask themselves at pretransition, “‘What is my commitment to help that person be successful taking over my practice?’” and stick to that commitment through the transition process.

Keep unforeseen circumstances in mind

Unexpected crises have the power to drastically change the trajectory of one’s retirement plan, Ms. Horwood says. When her husband, who is also her business partner, suffered from a heart attack, she felt particularly fortunate to have already established a plan for selling her book of business. As such, she says it’s important to anticipate these events when crafting a retirement plan.

“What if you get sick?” Ms. Horwood asks. “Thankfully, we had already had a plan, because what if we didn’t, and what if he had died, oh my gosh, it might have just all gone up in smoke. So, you’ve got to get this done before unforeseen circumstances come into play. That’s where it becomes part of your business plan and it’s long term. … Thankfully we had everything in place in our long-term plan in our succession, and that came into play, and we were really pleased.”

Recognize when it’s time to sell

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“When you are no longer growing or enjoying the business, you have to sell at that point, because at that point you’re just coasting. It’s not good for the firm, and it’s not good for your clients,” Ms. Horwood says.

And while recognizing when you’ve lost steam in your career can be tricky, Ms. Horwood points to a few key signs that it’s time to transition.

“If you see where no new assets coming in, no new clients, revenue is decreasing, that you’re just coasting, that’s corporate, you know, that can be seen,” she says. “When you start to lose enthusiasm, when you start working less, when you start coming in later or going home earlier, not working as much, more holidays, that is something where you can see the person is no longer growing and I believe corporately, the manager, everybody sees that already. You can’t hide that, that’s very transparent.”

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