A financial planning dealer group has come up with a solution to help younger advisers buy well-established practices.

The problem is many of the older practices have large client books with substantial trail revenue, Guardian Advice EM Simon Harris says.

“The Baby Boomers running these practices have been very successful and some of their businesses are now worth millions,” he told insuranceNEWS.com.au.

“These are long-term life books, but it is very hard for younger advisers to find the equity to acquire them.”

The dealer group will buy an equity stake in a practice on behalf of the young adviser.

“Guardian’s Practice Equity model offers principal business owners the opportunity to partner with us on a minority basis to support their transition to retirement,” Mr Harris said.

“This allows younger advisers access to capital and ownership, but we will never take more than 50% of the equity.”  

Guardian can also offer support with systems and back-office services including bookkeeping, reception and virtual office, Mr Harris says.

“We engage in proactive conversations with all the advice practices in our network, to understand where they’re at in their businesses’ life cycles,” he says.

“From that analysis we can see Guardian’s network is in a very stable position… our adviser base has a good cross-section of ages.”

As more Baby Boomers head towards retirement; Mr Harris says succession planning is becoming a pressing issue.

“We expect to work with a handful of practice principals on business succession and acquisition strategies to help them smoothly exit and hand over their practices to the next generation,” he said.