In this episode, titled “Maximizing the Value of Your Practice,” we explore how to prepare for and optimize the sale of a book of business as a financial advisor. With insights from Tim McWhinney, Regional Vice President at PPI, we discuss when to begin planning a sale, what buyers are truly looking for, and the key strategies that increase the value of a practice. Tim shares his hands‑on experience with buy–sell transactions and reveals the concrete actions that make a business more attractive long before it hits the market. It’s an essential guide for anyone considering selling their practice—whether now or in the future.
Listen to the episode:
Geoff: So, Tim, what are the common pitfalls that advisors encounter when they want to maximize the value of their insurance practice as they’re preparing to transition their business for succession?
Tim: That’s a great question. I think, just like any business, our industry is evolving rapidly.
Changing landscapes, changing how we do business, regulation changes, compensation changes, and in s- particular, an advisor aging population. Um, and as a re- result of this aging popul- -lation, what we’re seeing is a lot of advisors are starting to really consider, what does succession look like?
Um, they’ve worked in this career often for several decades, 10, 20, 30, 40, 50 years, and they’re ready to move on, uh, and pave the way for the next generation to take over. And in so doing, there’s a lot to consider when you’re looking at, “Okay, here’s my life’s work. How do I m- move it on to the next generation?
How do I sell this business that I’ve really built from the ground up?” There’s, of course, many different factors that go into such a decision, but really, what stands out to me, there’s always three underlying pitfalls that always seem to come back in this conversation. And those thrip- pi- those pitfalls are, um, okay, how do I embrace and leverage technology?
How do I stay ahead and ensure my business is compliant? And the third one is, do I have a business continuity plan in place? Those are often the three.
Geoff: Okay. Oh- okay, that’s fantastic. So let’s- let’s dive into each one of those to make sure we understand.
So I can imagine if we’re thinking technology, there’s probably an advisor there, 50, 60 years old, thinking to himself, “That’s the last thing I want to do is start having to worry about embracing the latest and greatest technology just to get out of this business.” So can you just walk us through why technology needs to be something that they’re thinking about?
Tim: Yeah. I mean, Jeff, you’re absolutely correct. Technology is expensive. It’s time-consuming. It’s ever-changing.
It’s really hard to keep up with and specifically if you never implemented such technology in your practice before, 10, 20, 30 years ago, to think about doing it today is just simply too overwhelming. But I think there’s a few keys to success here and avoiding the problem won’t make it go away.
Ultimately, you really have to embrace technology and the f- most common ways that we can do that, ’cause technology is, it’s a broadly used term, it can mean so many different things. Um, so let’s break that down a little bit into really three primary drivers that I see advisors and their firms embracing. And the first one is digitizing your practice.
The days of having client files sitting in your office, row after row of client files, and sifting through physical paper documents, if you’re looking to transition your business to a new advisor, that’s the last thing they wanna see, is rows upon rows of client files. What they wanna see is the digital practice.
And so I always start to, uh, encourage advisors that if they’re still using physical files to really understand, “What would it take for my business to digitize my practice?
How do I convert these physical files to a digital file?” There, once they’re digital, as we all know, now you can start to implement tools to sort it, to track it, identify opportunities, but that first step of getting those physical files in a digital file is always one that I encourage advisors to start investigating when they think about, “How do I leverage technology?”
Geoff: This kinda sounds like the steps you need to go through when you’re selling your house, where you could just put it on the market, but you’re probably not gonna be as competitive with other houses. But if you take the time t- for a little paint, a little renovation… A- and I don’t think you’re asking advisors necessarily to stop their entire practice and just sit for weeks digitizing it.
It’s not like they couldn’t a little bit of an investment, hire someone to- to support this process? Like, there’s different ways to approach this, I imagine.
Tim: Yeah, absolutely. It’s a great analogy and I- and I think it’s spot on. And it’s not as daunting as we think. I- I think of a very successful firm that I know, um, and this person isn’t even that long in the business, but they understood this, got about 15 years experience, and they just simply hired a summer student, paid him an hourly wage throughout the summer, and they did that practice. And, uh, it was a family friend.
Um, it didn’t take long, it wasn’t daunting. The family friend was a university student, very well-versed in this type of thing, uh, and they were to delegate that offer very, uh, affordable solution to- to really digitize his practice. And it was- it was a great example to see it happen just in a matter of about six weeks. This individual came in, worked a couple hours a day.
Next thing you know, their practice is fully digital.
Geoff: So is this about also,
like if you’re not digital, you probably don’t have a CRM or maybe you have some sort of CRM. Is it about f- choosing a CRM that is really popular in the industry and getting your business into that CRM, or is there different… Are we talking about something different than that?
Tim: Yeah. That would be what I call phase two. Phase one is digitizing- digitizing your practice. Phase two is, okay, now let’s get a CRM in place to manage this digital practice.
Uh, I would say, as we all know, there are so many CRMs out there, it’s a little daunting at times, frankly. Uh, there’s so many to choose from and it could get to that point where there’s so many options that you get confused and you decide to do nothing. And that’s what I see often in advisors, is they- they go down the rabbit hole of looking into a CRM. Well, then there’s another one and another one.
And they look at 10 different ones, and all of a sudden they’re overwhelmed and they take a step back and say, “You know what? Maybe I’m not even ready to invest in a CRM because I don’t know exactly what I’m looking for.” And that is something that we see advise- … That’s where my role comes in, is to really help them identify which CRM is right for their business. Because it’s not a one-size-fits-all, it’s what is it specifically about your practice that makes you unique?
What type of clients do you go after? What type of marketing strategies do you use? And then from there, we try and pair a CRM with that advisor accordingly. And so I always often encourage advisors to look at a couple different options.
We always have a few that we refer just based on the specific nature of a financial advisor in the life insurance business that could probably suit their needs. Um, but we always encourage them, once you digitize your practice, the next step is to adopt a CRM.
Geoff: And I think heard you say that there are three areas of technology to consider, so what would be that third piece?
Tim: Yes, the third one is the elephant in the room, of course. It’s AI. Um, AI, the firms who are starting to be curious about AI are really setting them up for success in the future.
And again, AI is, is such a broad term and it, it can be scary. I know even me, it scares me thinking about what, what its capabilities are at night and how to leverage it. Am I leveraging it accordingly? Am I leveraging it too much?
Where should I be in the AI journey? Advisors are constantly thinking about this.
It is something that advisor, the modern-day advisor, has to think about, is how do we leverage AI? Because the reality is if you’re not leveraging it, your competitors are, uh, and you might run the risk and the danger of falling behind. Now, AI doesn’t mean you have to use it for everything. It doesn’t mean you have to radically change the way you do business.
Um, what I always recommend to advisors if they’re not using it is just to be openly curious about it and just start playing with it, um, on a daily basis. It doesn’t even have to be about your business. You know, we see all the television commercials, they ask you to use it when you’re at the grocery store or that type of thing. And just familiarize yourself with w- what is a prompt?
How do I engage AI? How do I start to use it in my day-to-day life? That’s really the first step. And once you’re open to learning and open to implementing it, then the sky’s the limit in terms of what it can do for you and your business.
Geoff: So in terms of preparing my business for succession, wha- how is that AI learning process facilitating me increasing the value? What’s that connection?
Tim: Great question. So if your business is technology friendly, it’s digital, you have a CRM, you’re using AI, what you can start to do is find efficiencies in your business and start delegating a lot of the traditional, uh, aspects of your business to AI. And I’ll give you a good example, is just with client notes.
Client notes are difficult to read, as we all know, in a traditional file. Uh, they take up a lot of space. Uh, oftentimes, they’re not organized correctly. Versus if you start using AI to track your notes, uh, and you have a meeting and you have AI to generate your notes for you, that’s in the digital client file.
Now when a buyer comes and looks at your business and they say, “Okay, in this digital client file, I see all of the notes organized correctly. I see all of the follow-ups and everything that’s been enforced, all the activities that have been tracked through the CRM.
I can find it all neatly packaged in a digital file, um, that’s cloud based.” Now as an advisor, potential buyer, this looks much more attractive to me than a file that is not
using AI for its notes and I do have to sift through all these pages and they’re out of order and it’s difficult to read, um, it’s not categorized properly in a CRM and worst case, it is a physical file, um, that I then have to go and upload myself as the purchasing advisor and do all of that work myself.
If that work’s already all completed, now as a buyer I’ll say, “Hey, I’m willing to pay top dollar for that business because all this is done. I don’t have to go in and do all of that.”
Geoff: Now, simply because you said AI, I know that compliance departments all across this country are all on the edge of their seat waiting for us to have some sort of disclaimer just to make sure that we’re keeping everyone safe who is listening to this.
So if you’re introducing AI to an advisor, is there some sort of guidance you give them around privacy and security of client data? Like, w- how do you coach them? What are you saying to them in that area?
Tim: Yeah, it’s a good question. This is where I probably wish I had my disclaimer as well , because, uh, I don’t wanna, I don’t wanna do a little faux pas myself, but of c- It is- it is one of the first thing that comes up when you talk about AI, is disclaimer, privacy, privacy breaches.
I was just in the office today, I heard one. There was an urgent situation, uh, where we had to act accordingly. It’s really the biggest fear right now when we talk about embracing technology. And I would say the good news about some of these CRMs that we’re recommending, that are specifically designed for life insurance advisors, is they have these policies and procedures in price- in place.
So, you don’t have to try and think about, “Well, what would this mean for me?” I would just say look at their policies and procedures. And when you’re interviewing, investigating CRMs, really look into how they’re storing their data, what are their privacy disclosure agreements, um, what are they doing to protect you and your clients?
And there are a lot of Canadian-based CRMs that are built by financial advisors or previous financial advisors who’ve worked with the regulatory bodies to really understand what those impacts are.
Geoff: and I would add to that, to avoid using all the free tools ’cause they’re the least safe of anything that is out there. If you’re gonna be using AI, be paying to have that walled garden, if you will. So, okay.
Okay. So we’re already in this compliance mindset, so let’s go to that second stage of in- increasing the value of your practice. You mentioned compliance, so walk us through what that is.
Tim: Yes. I’ll start by saying I love compliance. I think compliance, uh, is a great tool. And not only is it a tool, there’s a saying that I love to hear in our business that compliance isn’t your enemy, it’s your edge.
So compliance isn’t your enemy, it’s your edge. What I think about when I hear that is oftentimes you could argue that compliance has a negative connotation. Perhaps it takes away from your day-to-day activities, which is driving revenue, helping Canadians have financial plans.
I would argue that’s exactly what compliance is doing. A business that is compliant will not only increase the value of your practice, which I’ll get back to in a minute, but if we just take a step back for a second, a compliant practice will make your processes more efficient, which would give you time back.
In my mind, it makes you more referable as your clients will see you’re genuinely invested in their best interest. And a compliant financial plan will start to, in my mind, generate more, more referrals for your business. And ultimately, to get back to the point, it will increase the value of your book of business.
I’ve seen practices or businesses from advisors, um, and they always ask me, they say, “Well, what’s the valuation? What’s the standard valuation for, uh, an advisor’s business?” And you could ask ChatGPT, going back to AI, you could ask any, um, AI tool, or just Google it. And in our world, businesses go from anywhere…
I mean, it’s, it’s a relatively large range, but I would say anywhere from one to five times multiple of annual, um, renewal commissions. That’s, that’s what you would pay for a business, anywhere from one to five times. And the first thing you say, “Well, that’s a pretty wide range.
How do we hone that in a little bit?” And a lot of times it often comes down to a book of business that is compliant will go for three, four, five times.
A book that is not compliant will go for two, one time. An advisor will not pay top dollar for a business that inside those client files doesn’t have everything, and that file needs to be bulletproof. And we’re talking about the standard things that we need to see in there.
Client notes, like we talked about, critical. Disclosures, needs analysis. Those are the most common ones. And the, the, the other one that, uh, we need in there is reason why letter.
If those are all in each and every client file, a purchasing advisor will look at this business and they will say, “Goodness, this is bulletproof. This advisor did everything. I can take on this business.
I will purchase this business and know that the risk is very, very limited that I will inherit a compliant risk down the road.” Our business is generational, which is fascinating. We’ll save that conversation for another day.
But I sell an insurance policy today, uh, in a perfect world, that doesn’t pay out for another 50, 60 years. Like we’re making promises for decades and decades. And so a practice that isn’t compliant won’t hurt you today and it will hurt you down the road.
And so for an advisor who has a business where they are focusing on compliance and they have all of those processes in place, it will make it very attractive for an advisor to come in and pay top dollar for that book of business.
Geoff: That’s amazing advice. I love that concept of, it’s your edge. I am curious, though, you know, if we go back to that real estate analogy, I can bring in a home inspector who has a in-depth insight and they can dig through all the corners of the house to make sure that it’s compliant, to make sure that it’s all these things that you’ve identified.
What does it look like for an advisor? Is it just they have to invest days, weeks digging deep into a practice they’re exploring buying? Is there other experts they can bring to the table to help them evaluate it? How does that work?
Tim: Good question. I would say if we stick with the house analogy, I as an advisor, and this is what I always encourage the selling advisor to do, is to be very upfront about that. And rather than have the buyer have to do this investigation themselves, be prepared as the seller to really help an advisor understand, here are all the compliant practices that I have in place.
And actually go on the offense versus having to have an advisor come in and dig around. And so, I always enc- encourage selling advisors to document all of the compliant practices that you’ve done and have them ready in your proposal for when you go to put your… Uh, to use the analogy, put your house on the market, just like you would put your business on the market.
Um, and you d- you have your home inspection to say, “Listen, I’ve got nothing to hide. An inspector came in. They did their due diligence. There’s no risk.
Or if there is a risk, it’s been identified.” Same thing when you buy a book of business, is that I would always recommend advisors to be very upfront and actually get to it first before a buyer even has to ask about it. Have your compliance procedures ready to go so that they really understand this is something that you’ve taken seriously.
Geoff: Oh, that’s great advice. Okay, so the- the last piece of the puzzle that you identified for us was the idea of business continuity. So walk us through that piece of the puzzle.
Tim; Yes. This one can be neglected at times, but I really think it’s important.
And I’m always drawn back to the old adage that I’ll paraphrase, which is, “If your business cannot survive without you, it’s not a business, it’s a job.” Advisors are very guilty of this old adage because we got into the business just like myself. We didn’t know we were business owners.
We came in to really help Canadians and build a financial plan. But the more successful you are, the more intricate your business becomes. All of a sudden you’ve got staff. All of a sudden you’ve got costs. You’ve got rent. You’ve got tangible and intangible costs. And everything starts to arise just like a traditional business owner.
And when we got into this business, a lot of us didn’t think of that, you know, and, uh, think of advisors who, again, have been in the business 20, 30, 40 years, um, they’re very successful at being a financial advisor. They don’t realize at the same time that they were a successful business owner.
And more and more responsibilities pile up as a business owner. What I always ask advisors who are looking at purchasing a business, I always ask them, and I’ll say, “Ask yourself this question.
If you took over this business today, how long would it be before you think you could start making it profitable?” If the answer to that is, “I think I could be profitable tomorrow.” Then I would say, “Okay, then you’ve probably got a good business on your hands, go ahead and buy it.” Someone says, “Well, it’s gonna take me years to-
to really understand how this business works, untangle this web, and really figure out how I can make money out of this thing.” Then I’d say, “Well, I think you answered the question and you probably don’t want to buy it.” Business continuity planning is not only great for
your business today as a business owner to say, “Okay, well, what happens if there’s an emergency? What if I get sick? What if I pass away in- unexpectedly?
Are there processes and procedures in place where my business can survive without me?” So I would recommend whether you’re looking to sell or not, you should have business continuity plans in place. But if we think about an advisor who’s thinking about succession, they’re moving on their business.
Once again, if they have the tools and processes in place and com- client communications that were to say, you know, “I’m going to retire.
Here’s my succession plan,” and all this is well-documented and prepared, an advisor could look at that and say, “Hey, if I buy this business today, I think I could take over quite seamlessly and we could probably continue to generate revenue into this practice.” So that’s really what we want to see when there’s a good match between a buyer and a seller.
Say, “Is your business ready to be sold?” It’s a heavy question. Um, but if you have tools and processes in places that could say, “Yes, I could remove myself as the person who’s built this business.
I could remove myself out of the equation, put someone else in there, and the business could still survive.” Now all of a sudden, that’s really, again, we say, “Well, does my business go on the high end or the low end?” That’s how we really get it to say, “I think this is on the high end.”
Geoff: Now, you- you mentioned to me before we started this conversation that you have a lot of experience navigating or helping advisors navigate the buying and the selling part of the process.
Uh, I love the analogy that you’ve given. That you ask the question, “Is your business ready to be sold?” Because I imagine there are advisors out there who are just thinking, “Yeah, when I’m ready, I’ll just go and I’ll just put it on the market and- and it’ll be done.” How much runway, how much lead time should an advisor be planning for to give themselves what they need to get that business in order to sell at the highest value?
Tim: Yeah, it’s a great question. We’ve run lots of workshops, uh, on this in the past. And, the number that keeps coming up in the research we show, and i- it might sound a little high for some people, but it’s around five years.
Um, five years. And I think of the most successful book transfers that I’ve ever been a part of, it’s where a potential buyer and a seller meet, um, and the first and most important thing that comes to mind is fit. Are these two a good fit for each other? How do you establish if they’re a good fit? Well, it’s trust. Trust takes time.
And unfortunately, trust cannot be gained, built overnight. It takes, in my mind, uh, years to- to really get a trustworthy relationship. The most successful businesses that we see is an advisor who understands that, “This is my plan.
I want to sell my practice at this date down the road.” And they work backwards from there. The old Steve Jobs adage. And they say, “Okay, well in order to do that I have to probably find my successor today.” And it doesn’t mean you have to find the exact successor, maybe you have to h- try it with a few people. And unfortunately, it doesn’t always work out, but this is why you have to give yourself time.
But you really want to make sure that you’re giving yourself the runway. And frankly, what I say is you’re doing your life’s work justice.
If you’ve been in the business 20, 30, 40 years, your clients know you, they know your family. You’re an integral member of your commu- community. I’m fascinated by what advisors do outside of just building financial plans. They’re always great members of their community and they leave lasting legacies for generations to come. The way you do that is you find your successor years in advance.
If you’re just selling your business for the highest bidder and you don’t care who it goes to, and that happens, that’s some people I see that happen all the time. But generally speaking, what they want to do is they want to sell to someone who shares their same values, who shares their same ethos on how they want to support their community, how they want to help Canadians.
And that takes time. And so ultimately, five years might sound like a lot and we don’t all have that. But I would say the earlier the better. You can start thinking about succession and business continuity in who you want to take over your business, the more you’re setting yourself up for success down the road.
Geoff: I love your explanation that this isn’t just a transaction, it’s the transition of your life’s work. I mean, that, I think, just puts the period on the sentence of the value of this- of this exercise.
So, I- I know we’ve introduced a lot of ideas, and it might feel overwhelming to folks listening, so I- if we could just… With one final question, I’ll ask this, what advice can you offer to an advisor on how they should address these concerns without getting overwhelmed? Because I imagine this could feel overwhelming.
Tim: Yes. And that’s always my biggest fear. My biggest fear is I meet with an advisor and they leave the meeting more confused when they got there. And that’s what we hear about Canadians when they seek financial advice. A large percentage of Canadians will go in and meet with a financial planner; they leave the meeting more confused than when they got there.
Um, so I think call to action, Jeff, is critical, and it’s- it’s a very important question that you ask. If we think about technology, we covered this already today, what is a call to action?
I would say, and this is relatively new in our business, I would say consider hiring a technology consultant. I’ll be honest with you, a year and a half ago I didn’t even know what a technology consultant was.
Um, I’m on this journey too. But you hire a professional. If you’re genuinely curious and interested in technology… As we talked about, technology’s expensive, it’s time-consuming. If you don’t even know where to start, you could spend hours and hours, days, weeks, you, your staff, looking into technology, trying to understand what to do, all the while might be looking in the wrong places.
This can take time, effort and money away from your business. Just like you hire an accountant, just like you hire a lawyer, I would recommend, if this is something you’re serious about and you know your business has to evolve and change and embrace technology, consider hiring a technology consultant. Just like a business or just like a- a lawyer or an accountant, you can have a consultation. They’re free.
Um, and you really say, “Well, what can a technology consultant even do? What does that even mean?” Well, have a- have a consultation. And that’s what I always encourage advisors.
I’m not the expert. I can point you in the right direction, and we have some really good consultants that we’ve built relationships and we start referring to. But that’s a nice easy way to work yourself into this market. And again, at- at a consultation, doesn’t even cost you any money to have a con- conversation. What are the right questions that we should even be asking?
And then if that consultation goes well, consider onboarding that consultant just like you would a business consultant or a business transition coach or any other service you would pay. It’s well worth it if you’re thinking, “Hey, we have to evolve our business and embrace technology.”