Financial planning, by definition, involves making a plan for the future. Yet over 50% of business owners have no exit plan.

With over 50% of advisers expected to retire over the next five to 10 years, this needs attention.

Why? Because what should be self-evident, particularly for advisers, is that having a plan will most likely lead to a better outcome in the same way getting to your destination is much easier if you know where you are going.

When preparing an exit plan, it is important to consider what your objectives are, what your requirements are and what values you prioritise.

You may lose good staff who don’t appreciate or understand the strategic plan and direction of the business

For example, an objective may be you want to preserve the legacy of your firm, a requirement may be you need to support a family member in the business, and you may value independence and continuing to support clients in their best interests.

A good starting point is to be clear about what is important to you, as this will then be the foundation for the plan best suited to get you there.

Another key point to determine is your timeframe for exit and retirement. Are you ready to exit now or are you looking to start planning for the future? Do you want to ‘take some money off the table’ and continue working or do you want to sell and retire?

Getting clear on your timeframes, be it near-term (next 12 months), medium term (next one to five years) or longer term (five years plus) will influence your planning and what you can do to prepare.

If you are ready to exit now, it is likely any transaction will be a catalyst for some immediate change within the business in terms of management, structure, authorisation, client servicing and staff, and this will need to be understood and executed upon as part of completing the transaction.

If you are ready to exit now, it is likely any transaction will be a catalyst for some immediate change within the business

However, if you are wanting to plan for the future, there are a number of steps that can be taken now to set you up for your exit event and minimise risk and disruption when you are ready to sell.

For example, you could seek to transition regulatory and compliance responsibilities so a ‘change of control’ or new authorisation event is not necessary in the future.

Human nature often seeks to delay or defer matters considered painful or uncertain. So, if you are an adviser seeking to sell your business, it shouldn’t be underestimated how emotional it can be when you start to consider what you will ultimately do with it and which route may be best for you, particularly when you haven’t done it before.

This can cause paralysis and limiting beliefs may emerge such as, “I don’t have a successor”, “I can’t be bothered dealing with change now” or “I am concerned about the incremental costs I may incur”.

Yet, what is often not considered at this juncture is the opportunity cost of not taking action in terms of time, value and peace of mind. You may lose good staff who don’t appreciate or understand the strategic plan and direction of the business, which might be based around them.

It shouldn’t be underestimated how emotional it can be when you start to consider what you will do with your business

You might actually save money in the long-term but making the modest investment of time and resources now. You will likely reduce risk by ensuring your long-term regulatory authorisation and client servicing arrangements are in place.

So, if you are ready to exit your business or want to plan for the future, make a start now. And if you need motivation or help gaining conviction, fast forward to the future where you are on the other side of your exit and retirement doing what you want with whom you want. This can often make what seem like big decisions now trivial by comparison.

Angus MacNee is chief executive of ValidPath