How “no less than market value” is set
Who sets the floor, when it is set and what happens if you disagree. Three questions to ask of any such commitment, including ours.
Who sets the floor, when it is set and what happens if you disagree. Three questions to ask of any such commitment, including ours.
Equity & General's Securo programme document contains this commitment: E&G acquires your assets under management at no less than market value when you choose to retire.
Ask the same questions of it that you would ask of any buyer.
A floor based on today’s market and tested in six years is a different commitment from one measured at the point of retirement. Under Securo, market value is measured when you retire. Nobody can fix a fair price years in advance, so measuring at retirement is fair to both sides whichever way the market moves.
This is the point to examine most closely. If the buyer sets the number alone, the floor is whatever the buyer says it is. Agree a basis in writing before you join, so that the valuation applies a method both sides have already accepted.
Ask for the method, and ask what happens if you disagree with the result. Ask us the same questions.
This decides whether the floor protects you. If the only alternative to the offer is no transaction and no exit, you will be negotiating with no alternatives.
Under Securo, if terms cannot be agreed your clients are novated to a host of your choosing. This is written into the arrangement from the start.
In a conventional sale the price is set when the seller has the fewest alternatives: they are tired, they have decided to sell and they have a date in mind. Agreeing the basis years earlier means agreeing it while you still have options.
Preparing for retirement takes longer than eighteen months. How long each part of the preparation takes, from the client files to agreeing terms.
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Your firm may have households below the level at which a servicing model pays for itself. Ask a buyer what will happen to them.
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A successor may already work at your firm. Internal succession most often fails because the successor cannot raise the money.
Read itSteven Bates, Director of Advisory at Equity & General, takes the first call with every adviser. Ring him on 020 8396 0486 or send a short note about your firm.