Who is a good and loyal customer? Who has brought more business to you? Who has only conducted one transaction? Which clients are simply no more than a name and some contact details?
Many advisers have been meticulous in valuing the worth of each client to the business and working out how each segment will be served in a cost-effective and careful way in the future.
Putting the client book through a rigorous RDR-cleaning process and breaking it down into various segments is a good selling point: nobody wants to inherit an untidy legacy client bank, filled with names that have no up to date contact information or people that will not bring any value to the sales process.
2) Sort out your administration
Getting RDR ready also means ensuring that your processes are up to date and your book-keeping and accounts have been scrutinised for any cost savings and tax planning put in place for the new adviser-charging world.
Excess expenditure will have been trimmed and any loose ends – income not claimed, credit owed to you, legacy business – will have been tied up or at least recognised and earmarked for resolution.
Having a clean, up to date data file is key when a potential buyer comes to the door: nobody wants to be sifting through piles of disorganised paperwork.
3) Ensure you are RDR qualified
If you have got yourself level 4 qualified, or your client-facing staff have done so, then a buyer who is ready to take advantage of this RDR world will be more interested than if they have to take on any untrained staff.
Do not consider the time you spent getting yourself level four ready to be wasted. Remember, a lot of the value of the firm is embedded in you, in your talents, your business acumen and your relationship with the client.
If you and your employees have made yourselves ready for RDR, a potential buyer will be confident that your firm is a good purchase in this brave new regulatory world and will not present a potential liability.
4) Showing your value post-commission
Many advisers have expressed concerns that, without the recurring income generated by commission, it has become harder for them to evaluate their firm. Previously, recurring income has been used as a key selling point when it comes to estimating a firm’s turnover and profits.
Many advisers believe the end of commission-based remuneration means an end to recordable, regular income that appears in a quantifiable form on the balance sheet.
It certainly does mean the end to a standard form of charging and there are myriad options for advisory firms. Moreover, there are so many ways a firm can generate income that translates into profit. Remember the old adage: ‘Turnover is vanity, profit is sanity’.
