{"id":730247,"date":"2026-06-11T18:03:16","date_gmt":"2026-06-11T18:03:16","guid":{"rendered":"https:\/\/www.newsbeep.com\/ca\/730247\/"},"modified":"2026-06-11T18:03:16","modified_gmt":"2026-06-11T18:03:16","slug":"why-practice-valuation-often-comes-last-when-finding-a-successor","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ca\/730247\/","title":{"rendered":"Why practice valuation often comes last when finding a successor"},"content":{"rendered":"

Open this photo in gallery:<\/a><\/p>\n

Christine Timms (right) speaks during a panel discussion on best practices for buying and selling a book of business at Globe Advisor’s Wealth Leadership Forum 2026. The other panellists included, from left to right, Deanne Gage, Globe Advisor reporter, Joe Millott of Fort Capital Partners and John Novachis of Investment Planning Counsel. Photo by Jenna Muirhead.Jenna Muirhead\/The Globe and Mail<\/p>\n

When Christine Timms decided she was ready to retire, she looked for compatibility in her successor, above all, to ensure continuity for her clients. <\/p>\n

Ms. Timms wanted someone who could handle discretionary accounts and insurance, had a deep commitment to financial planning and overall service, took the same approach to investing as she had and would make a long-term commitment to her clients.<\/p>\n

The two advisors who bought her book came from her own team at CIBC Wood Gundy, and that built-in alignment led to an \u201camazing\u201d retention rate after she retired in December, 2016. <\/p>\n

\u201cWe had more than 300 households when I retired, and my two successors only lost about one a year for three years after,\u201d said Ms. Timms, who\u2019s written handbooks for financial advisors, during a panel at Globe Advisor\u2019s Wealth Leadership Forum 2026 on Monday in Toronto.<\/p>\n

For advisors buying and selling books of business, compatibility and a shared philosophy often matter far more than valuation to getting a deal done, the experts on the panel said. <\/p>\n

\u201cI always say to people, \u2018Do you understand why this person wants to sell?\u2019 It\u2019s the most important thing you can do,\u201d said Joe Millott, partner in the financial services and investment banking group at Fort Capital Partners, which specializes in wealth and asset management mergers and acquisitions. <\/p>\n

\u201cValuation comes right at the last [minute] when folks really understand each other and why they want to be together.\u201d<\/p>\n

Advisors should start their succession planning early, Ms. Timms said \u2013 particularly those who don\u2019t have someone on their team to take over their book. <\/p>\n

Long-term clients \u201cknow how old you are,\u201d she said, and might stop sending referrals \u2013 or even walk out the door \u2013 if there isn\u2019t a plan in place. <\/p>\n

\u201cYour successor can change over the years,\u201d she said. \u201cIf you have to change it, that\u2019s fine. [Clients] just need to know you have a plan.\u201d<\/p>\n

Selling advisors need to \u2018go away\u2019<\/p>\n

John Novachis, executive vice-president for advisor growth and succession at Investment Planning Counsel, said any transaction needs to have a great client transition plan. <\/p>\n

The seller\u2019s role is to act as a chairman, introducing their successor to the clients. And then they need to \u201cgo away,\u201d so their successor can step into the role. <\/p>\n

\u201cGreat transitions don\u2019t involve an advisor staying for multiple years,\u201d Mr. Novachis said.<\/p>\n

Ms. Timms said she stuck around for one year after the transaction to help her successors through a full cycle as new owners.<\/p>\n

In cases in which buyers and sellers are aligned philosophically but can\u2019t agree on a valuation, Mr. Millott said he\u2019s seen agreements where the selling advisor stays on for a few years to prove out the business\u2019s growth story. If they succeed, the buyer pays the higher price; if not, the business is purchased at a lower valuation.<\/p>\n

Finding the right price<\/p>\n

Mr. Novachis said buyers evaluating what to pay for a book should look to the selling advisor\u2019s recurring revenue, asset mix, client size, average household, age and registered retirement income fund depletion rates to determine the overall health of the business. <\/p>\n

From there, he said, they should consider how well the business is run, looking at whether the advisor is leveraging technology and invested in financial planning and great client experiences.<\/p>\n

Mr. Millott also advised looking at whether a selling advisor\u2019s business is still growing. He said he\u2019d interviewed an executive at a major dealer who said that practices were trading for an average multiple of 3.5 times revenue, but across the franchise, the average number of accounts opened in the past seven years was two. <\/p>\n

According to IPC studies, the natural attrition rate on a book of business is 6 per cent annually. \u201cIf you\u2019re not growing, you\u2019ve got to get 6 per cent market [gains] just to stay flat,\u201d Mr. Novachis said.<\/p>\n

He added that advisors should ask sellers for their asset continuity schedule: the opening balance at the beginning of the year, new deposits and withdrawals, and the ending balance for a few years. <\/p>\n

\u201cThat will tell you a lot about the business you\u2019re buying, and you can extrapolate back to where growth is coming from,\u201d he said.<\/p>\n

If the buyer is the right fit but the transaction cost is a hurdle, Ms. Timms suggested structuring the deal to give the buyer more time to pay out, as she did with her own successors.<\/p>\n

Mr. Novachis cautioned advisors against using acquisitions as their entire strategy. <\/p>\n

\u201cYou can\u2019t grow your way to success through acquisition,\u201d he said. \u201cSuccess is defined by your own organic strategy.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"Open this photo in gallery: Christine Timms (right) speaks during a panel discussion on best practices for buying…\n","protected":false},"author":2,"featured_media":730248,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[1397,45,49,48,133,5266,2922,131,132],"class_list":["post-730247","post","type-post","status-publish","format-standard","has-post-thumbnail","category-personal-finance","tag-appwebview","tag-business","tag-ca","tag-canada","tag-finance","tag-globe-advisor","tag-noastack","tag-personal-finance","tag-personalfinance"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/730247","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=730247"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/730247\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/730248"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=730247"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=730247"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=730247"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}