Why Should Advisors Consider Exit Planning?

Submitted by Maddie Ernzen on Fri, 04/01/2022 - 9:02am
Why Should Advisors Consider Exit Planning?

Why Should Advisors Consider Exit Planning?

Whenever advisors are introduced to the concept of Exit Planning, they often wonder, “What is the work of an Exit Planner, and how can it benefit my practice?”

An Exit Planning Advisor leads the entire Exit Planning Process for business owners, from data collection to plan implementation. Even though some advisors might consider Exit Planning a time-consuming additional service, you might be surprised at how easy it is to implement with the work you are already doing. No matter your area of expertise – whether you’re a CPA, financial advisor, banker, or general business consultant– with the right strategies and tools, you can implement Exit Planning into your existing core services in a way that benefits your practice and your clients.

Small Adjustments for Big Gains

There are many benefits of incorporating Exit Planning into an advisory practice. However, most advisors assume it will take a long time to add a new service to their existing practice and reap the rewards. The reality is, Exit Planning isn't necessarily a separate space from current advisory services, and it doesn't need to replace core practices.

Instead, these services can complement the work that advisors are already providing to their business owner clients.  An owner’s exit is an inevitability that much be accounted for within their business plan. Consider some of the critical aspects of Exit Planning and the areas of expertise required. In each of these examples, advisors can provide the service for an additional fee along with the Exit Plan, or as an introduction to longer-term comprehensive planning.

  • Minimizing Taxes: One goal of Exit Planning is to reduce the amount of taxes a business owner must pay after transferring or selling their business. The necessary tax planning takes place years prior to the intended exit. CPAs involved in this process can provide analysis and advice on the tax consequences of different exit paths. 
  • Closing the Asset Gap: Exit Planning includes determining what financial resources an owner needs to reach their goals, putting a value on their current resources, and developing a plan to bridge the gap between the two. Because owners tend to overestimate their business value and underestimate the amount they need to maintain their lifestyle, a Financial Advisor can play a huge role in setting realistic expectations and offering advice on personal investment strategies that are aligned with goals.
  • Obtaining Excellent Management: Business owners will need capable management to run the business after their exit, whether external or internal. Business consultants can help owners keep value in the business during transition by obtaining and developing next-level management. Once the team is in place, advisors can develop Stay Bonus Plans to incentivize them to remain with the business and grow value.
  • Preparing for the Unexpected: Incapacitation, death, fall out between co-workers, and divorce are just some of the many unexpected events that can negatively impact a business without warning. Insurance advisors can review and adjust Buy-Sell Agreements to protect business owners from these risks.

The benefits mentioned above are just a few ways Exit Planning integrates with an advisor’s core practice. When advisors successfully incorporate these offerings into their practice and move beyond transactional planning, they set themselves up to be the indispensable advisor that owners turn to for all their business planning questions and needs.

Exit Planning Can Benefit an Advisor’s Practice

Exit Planning Advisors use strategies, tools, and services from their core practices to fully implement Exit Plans. Because of this, their practice can benefit in several ways:

Increased Revenue

The time and commitment to incorporate Exit Planning is nothing compared to the returns advisors will experience practicing in the industry. As a result, advisors will likely see additional planning projects that will naturally arise as a part of their core services. When advisors can prove their value to their clients by successfully completing one project, many owners realize the need for this advisor to assist in other areas of business planning, including planning for the exit of their business one day. 

Differentiate Practice from the Competitors

There are many advisors in the market offering services that don’t allow them to stand out from the crowd. Most advisors aren’t asking the questions necessary for long-term transition planning, and many don’t get involved in the process until it’s too late. Exit Planning Advisors are able to call attention to their practice because of their unique value proposition.

Create Awareness through Referrals

Though every owner’s exit is inevitable, unfortunately, many owners don’t see the immediate need to plan for their exit. Exit Planning involves advisors from different backgrounds and areas of expertise. Because of this, Exit Planning Advisors end up accessing more work in their core practice and in Exit Planning through referrals.

Build Better Client Relationships

Exit Planning provides an immediate benefit for both advisors and owners. Ultimately, it is the job of the Exit Planner to build personal relationships with clients to ensure their clients are reaping the highest rewards for their lives’ work. Continuous conversation throughout the process of an Exit Plan allows for stronger relationship and success becomes more rewarding.


What are you waiting for? If you’re ready to dive into Exit Planning, contact us today to schedule a meeting and together, we’ll get you on the road to being your client’s most trusted advisor.

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