Succession planning doesn’t necessarily mean retiring from the industry.

Dan Nolan, for example, started his business with his wife and in 2008 had about $28 million AUM. A couple of acquisitions later and that number rose to $270 million. 

For some advisors, that would have been the icing on the cake. But while 54-year-old Nolan loves the industry and his job as an advisor, he was not as enamored with being a business person. 

“I decided that if I focused on being just an advisor, I would have a better quality of business life.” - Dan Nolan

“It was clear that my business had morphed from an advisory business into managing multiple employees and multiple branches. It was changing for me. I had to make a decision around what I really love to do,” said Nolan. “I decided that if I focused on being just an advisor, I would have a better quality of business life.” 

It was around this time that Nolan’s MGA, Investment Planning Counsel (IPC), was embarking on a new corporate model of succession planning that Nolan found intriguing.

Derisked his business 

“I had built up the business to where it was worth something,” says Nolan. “The fact that I could derisk, deleverage it and keep doing what I wanted to do was really appealing. By selling off my business we sort of derisked our lives.” 

(IPC typically puts out an upfront payment of 50-60 per cent of the purchase price, pays an additional 20 per cent after a year and then pays the remainder after a retention test.)

Nolan, who is based in Ottawa, was delighted that his clients never missed a beat and retention was 100 per cent. “It was a win-win for me where IPC took on the business aspect of things and I get to be an advisor only, which I really like.” 

When he decides he no longer wants to work, Nolan will provide his clients with another seamless transition – this time to an advisor who already works with IPC. 

Valuations may decline 

Nolan also thinks he has sold his business at a good time. Valuations in the future, he believes, are going to be challenged on some businesses by the increasing number of disruptors in the advice-giving business.

In addition, the industry is rife with older advisors, many of whom may decide to sell their books of business at about the same time. That, he says, will only make valuations on these books of business lower than they are now.