How Many Independent Financial Advisors Make This Fundamental Error?

17/09/2010 by info.

The sale of a business is often the second largest transaction that a businessperson will have in their life behind the sale of their house. And a house sale will be of more interest to a Will Writer than an IFA. For some people it will be their largest.

A business owner invariably expects that the sale of a business will fund retirement; the proceeds will be reinvested in order to gain an income.

However when I am called into providing a marketing appraisal/valuation on a business prior to a retirement sale I am often met with the sentence. “If that is how much my business is worth I can’t afford to retire”.

The owner has assumed that his business is worth more than it really is, and is forced to either carry on working well into his 70’s or to place his business on the market at way above market value in the hope that someone will decide it is worth the over inflated price.

So I am shocked that no Independent Financial Advisor has contacted me asking for an assessment on a client’s business value, after all it is part of their client’s retirement portfolio. Surely they should be looking at ALL their client’s investments in their retirement planning advice? And this includes the value of their clients business. However what is seems they do is to either ignore their clients business or take their clients word for how much it is worth.

If an IFA knew the likely selling price of a clients business they would have time to help them plan their other investments to meet their needs I would have thought.

How many times has this oversight by a business owner and his IFA lead to their client having to work well into their retirement? Or having to retire on a much smaller income?

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