Becoming an expert on the exit plan

Becoming an expert on the exit plan

Becoming an expert on the exit plan The retiring business owner is a match made in heaven for the financial advisor.

In the U.S. alone, it is estimated that three-million business owners are expected to sell their companies over the next five years, reported, tagging this a ‘golden opportunity’ for wealth management professionals.

And, this only makes sense. Who better to help facilitate these highly-complicated exit plans than one specifically trained in financial planning? But training and experience are exactly what an advisor needs to take on this niche market.

Ontario financial planner, Ed Saleh, of Global Financial Associates Inc., says not just any advisor can take on this challenge. He believes an advisor, likely in their 40s, with more than 10 years in the business, who has expertise in various areas including; estate and retirement planning, corporate tax laws, accounting principles etc.

“These skills and expertise are not possible to gain in a short period of time. It takes at least five to 10 years until the person is comfortable and can maneuver with this information. I think certification is critical, as well as age and experience in the industry,” he says. “They must be a master of financial planning.”

This is why companies like Exit Planning Institute in the United States and Pivotal Planning in Canada, offer specific training in this area. The CEFA (Certified Exit Planning Advisor), for example, is a designation that trains the advisor to become a ‘coach,’ of sorts, helping individuals transition from business owners to retirees.

“Financial planners and advisors really are well-positioned,” Christopher Snider, CEO of the Exit Planning Institute, told “They should help owners start the process, they should be the quarterback for the team that the owner needs to assemble and they should be the point person for the liquidity event after the sale.”

Some of the main benefits of taking on the exit plan, identified by, include differentiating from competitors, developing deeper client relationships and the opportunity to expand your network and showcase your skills to other professionals, business associates, family members and hiers. Once the exit plan is complete, and liquidation of the company has occurred, the planner may even become the offical advisor to the retiree.

Though admittedly a great business-building opportunity and way to hone your expertise, Saleh identifies some key issues and considerations, dependent upon whether the company is a stand-alone proprietorship, a partnership or incorporated business. These include:
  • Possible medical conditions of the principal shareholder or executive who is retiring
  • Liquidation of the business - facilitating the buy-and-sell agreement, or transfer of shares
  • Transfer and continuation of benefits following retirement including critical illness or disability insurance
  • Distribution of pension income
  • Maintain company’s viability and ensure retiree is properly compensated through adequate funding mechanisms
  • Estate planning for retiree
“A financial advisor does have a very key role in planning and organizing a smooth transition out,” says Saleh. “We have the greying of our population. It is a great opportunity for someone specializing in working with '45 and 50 plus' individuals, who are in the pre- and post-retirement phases. “

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