The appetite for adviser business owners to acquire fellow rivals remains strong, with 42 percent saying they would be interested in buying another advice firm, according to a survey from adviser-built wrap platform Nucleus.
However, while the number of firms looking to buy has increased, up from 37 percent last year, 35 percent are interested in selling within the next five years and 30 percent have no considerations to sell their business.
Of those looking to sell, another advisory firm is the preferred route for nearly half of business owners surveyed. The lure of a large consolidator looks less appealing, dropping to four percent from 13 percent last year, with acquisition by a product provider looking similarly unattractive, with only one percent considering this route.
There has also been a significant increase (42 percent) in those business owners with a succession plan in place, from only 25 percent last year. However, still over half of owners don’t have a plan. Despite the slight increase in the age of responders this year, retirement still feels a long time away for many business owners, with 10 percent seeing this as an immediate concern or challenge.
Barry Neilson, chief customer officer at Nucleus, said: “Succession planning and M&A activity is something every advice firm needs to consider. Having a plan in place is vitally important, even if it is 10 or 20 years off, as unexpected decisions can come thick and fast and put a big strain on capacity if not prepared for.
“The challenge of succession is to ensure a smooth transition for staff and clients, minimising disruption and risk, all the while addressing the entirely reasonable financial interests of the founder – something that can be a tricky balancing act.”
Founded in 2006, Nucleus is a meeting point for more than 400 adviser firms and has assets under administration on the platform of £13.9 billion as at 31 March 2018.