Why Wealth Managers Need a Seat at the Exit Planning Table

Ray Croff of Mobius Financial Advisors is a member of XPX Dallas
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When your business owner client decides to sell, there’s a unique, uncommon opportunity for you as a wealth manager to provide an incredibly valuable service to your clients while also growing your assets under management.

As a wealth manager, you play a critical role in the lives of your clients. It’s not a stretch to say that their future is literally in your hands. They rely on you to ensure their retirement is going to look a particular way.

For business owners, exiting their business is almost always a key component of their retirement plan.

The sale of a business may be the biggest liquidity event in their lives. As a wealth manager, you have the opportunity to help figure out exactly how to make the most of that money for their retirement — or for any other purposes they may have in mind.

There’s a huge opportunity here — Baby Boomers are beginning to retire in droves (and will keep doing so for at least a decade). There are many business owners retiring right now who will need your help.

Here’s what you need to know about exit planning and the role you’ll play in it for your business-owner clients.

Figuring Out The Number

The first thing you’ll be doing for your business owner clients is helping them figure out the number: the amount of money your client needs to get out of the business when they exit.

Usually, retirement is the goal, but there are other potential goals. Maybe they want to open another business or start a non-profit. Maybe they want to engage in some philanthropy or set up a trust for their family.

Whatever the case, you play a major role here. As exit planners, we need you to help us figure out how much they need and then do a net present value of the amount. We can then subtract other assets that are available for whatever they have in mind and come up with the number.

Valuing the Business

Once we have the number, then we have to figure out how much the business is actually worth in today’s market.

That’s something the exit planners and business valuation experts in your network will help define. When we have a clear idea of how much our mutual client can potentially make from selling their business, we can then compare it with the number.

The difference between the number and the current value of the business will tell them what they need to do next. They’ll need your services for this. If there’s a shortfall, you’ll have to talk to them about what to do.

Do they want to reduce their standard of living for retirement? Work a little longer? Increase the value of the business and then look at a potential sale in a few more years?

Whatever the case, they now have a plan in place — and they’re looking to you to implement key components of that plan.

And of course, there are opportunities for you as well.

Opportunities for Wealth Managers

One of the first things exit planners will do is to have clients complete a financial plan for the business owner and other stakeholders — you’ll be responsible for your clients’ financial plans and potentially those of their key employees.

You also have the opportunity to capture more assets under management. And, as the exit planning moves ahead, there are other opportunities: for example, 401(k) or IRAs and other assets can be transitioned to your management.

Another thing to consider is that, once you become an advisor to a business owner, you gain potential access to their network. They might refer you to key people in their organization who also need your help — not to mention their family and friends.

For years after the exit, you’ll be managing their assets (and likely managing those assets for their family after they pass).

All this because you had a seat at the exit planning table and helped your clients through the process.

The Advisor’s Edge — The Education You (and Your Clients) Need

The Advisor’s Edge is a library of content that you can use to educate potential and existing clients on exit planning — and you can use it to educate yourself as well.

Instead of giving every client an individual presentation (which you probably won’t get them to schedule anyway), you can send them content that answers their questions and educates them.

Or you can bolster your social media and marketing efforts with short videos that build the case for working with you and trusting your processes and network. 

The Advisor’s Edge includes documents and videos that explain just about every aspect of what CEPAs, financial professionals, and business advisors do in a way that’s clear and highly professional.

The content is extremely high quality and has been created by top professionals in exit planning and value building.

This means your potential clients will see you not just as a resource and someone they can trust, but as someone who is a true expert, who really knows what they’re talking about.

Learn more about what The Advisor’s Edge can do for you.

Updated: September 8th, 2022

About The Author

Call Me When… You want high level expertise using life insurance in business and estate planning situations