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by Partner Contributed Article on December 12, 2024
Exit planning is rapidly emerging as a key differentiator for financial advisors, offering a powerful way to grow practices, deepen client relationships, and significantly boost Assets Under Management (AUM). Yet, many advisors have yet to capitalize on this opportunity. With leading Broker-Dealers (BDs) now incorporating exit planning to help their advisors stand out from the crowd, it’s only a matter of time before this service becomes an expectation for all FAs who serve business owners. Advisors who don't embrace exit planning risk falling behind, while those who do can position themselves as indispensable partners during one of the most significant transitions a client will face.
For many business owners, up to 80% of their net worth is locked up in their business (Exit Planning Institute, 2023). If you want to truly make an impact on their financial future, you need to engage with their largest asset — the business itself. By helping clients navigate the complexities of exiting their business, financial advisors can unlock significant liquidity events, build deeper trust, and gain a competitive edge in an increasingly crowded market.
In this article, we’ll examine how exit planning drives AUM growth, outline actionable strategies for implementation, and explore tools that can streamline the process to attract and retain high-value business-owner clients.
Why Exit Planning is a Numbers Game That Favors Financial Advisors
Financial advisors are uniquely positioned to begin offering exit planning services because it integrates smoothly into their existing core competencies and aligns directly with large, measurable outcomes. Here’s a closer look at the key metrics that demonstrate its potential.
1. The Growing Need for Exit Planning
The market for exit planning is enormous. There are over 30 million privately owned businesses in the U.S. (SBA Department of Advocacy, 2023), and 75% of owners would like to exit within the next 10 years (Exit Planning Institute, 2023). Despite this demand, 32% of business owners do not have a formal exit strategy (Exit Planning Institute, 2023), leaving a gap that financial advisors are uniquely positioned to fill.
2. Significant Liquidity Events
Small and mid-sized business sales often generate liquidity ranging from $1 million to $20 million or more, depending on the business and industry. For financial advisors, this represents a tremendous opportunity to grow AUM.
3. Intergenerational Wealth Opportunities
Exit planning often involves wealth transfer to the next generation. Advisors who guide these conversations establish long-term relationships with both the business owner and their heirs. This creates a pathway for sustained AUM growth, managing wealth across generations.
The Revenue Funnel: Maximizing Business Owner Client Value
Exit planning isn’t just about a single service — it’s about unlocking multiple revenue streams and creating success for high-net-worth clients. The revenue funnel illustrates the value potential for financial advisors working with these business-owner clients.
Stage 1: Contacts (6,000)
At the top of our funnel exercise, our advisor is starting with a pool of 6,000 contacts, representing potential clients. These could come from your existing client base, networking, referrals, or through marketing campaigns. Effective digital marketing campaigns incorporate lead magnets, email automation and social media outreach to help narrow this pool into more qualified leads.
Stage 2: Prospects (300)
From these contacts, 300 prospects (5%) (Barrons, 2023) emerge, expressing interest in your services. Engaging with educational content, interactive quizzes and assessments help establish credibility and build rapport. At this stage, leveraging prospect qualification tools ensures the right people make it through to Stage 3 so your time is spent on the highest-value opportunities.
Stage 3: Leads (225)
Of those prospects, 225 leads (75%) (Kitces, M., 2024) meet the criteria for qualification. These individuals represent business owners actively considering exit planning or other financial services.
Stage 4: Clients (135)
Approximately 135 leads (60%) convert into clients (Kitces, M., 2024), creating a significant base of long-term, high net worth business owner clients. These clients not only generate immediate AUM but often provide opportunities for upselling additional services like insurance and estate planning, in addition to the main liquidity event when they exit their businesses, and the associated revenue, more below.
Stage 5: Exits Per Year (4)
From those 135 clients, approximately 4 will exit their businesses per year creating significant liquidity events (derived from 30% of the 75% of businesses that want to sell completing a successful exit).
Revenue Opportunities for Financial Advisors: How Exit Planning Grows AUM
The revenue funnel highlights the full scope of financial opportunities available from business-owner clients:
- Exit AUM ($20M per Exit)
The liquidity event from a business sale often generates $20 million or more, representing the most significant opportunity for AUM growth. - Initial AUM ($200K per Client)
While not every client will transfer $20M immediately, the average business-owner client can transfer $200,000 early in the relationship, creating a strong foundation for future growth. - Insurance ($60K per Client)
Beyond AUM, business owners often require insurance solutions such as life insurance, key person insurance, and buy-sell agreements, representing an approximately $60,000 opportunity per client. - Annual RIA Revenue ($600K+)
Advisors managing a steady pipeline of business exits can generate over $600,000 annually, making this a scalable and sustainable growth strategy.
Best Practices for Exit Planning Success
1. Build Expertise
Exit planning requires knowledge in business valuation, succession planning, and tax strategies. Programs like the Certified Exit Planning Advisor (CEPA) designation provide a structured path for building this expertise (Exit Planning Institute, 2023).
2. Streamline Lead Generation
Effective marketing strategies, such as webinars and lead magnets, can help attract qualified prospects. Offering tools like business performance assessments can also demonstrate your value early in the client relationship.
3. Maintain Consistent Engagement
Consistent communication is critical. Leveraging automated email campaigns, social media posts, and personalized outreach ensures that prospects stay engaged throughout their decision-making process. Consider a targeted “done-for-you” digital marketing solutions such as Attract+ by Maus Software.
4. Create a Repeatable Process
Developing a standardized workflow for exit planning helps scale your services effectively. This might include:
- Conducting valuations.
- Mapping out tax-efficient transitions.
- Crafting investment strategies for post-exit portfolios.
Solutions such as Engage, by Maus Software automate the Value Acceleration Methodology, making the addition of offering exiting planning services a turn-key experience for FAs.
The Bottom Line
Exit planning is more than a service — it’s a strategic opportunity to drive substantial AUM growth while delivering meaningful value to clients. Advisors who master this niche can differentiate themselves in a crowded market, deepen client relationships, and unlock significant revenue streams.
The key to success lies in a structured approach: build expertise by pursuing an exit planning certification such as the Certified Exit Planning Advisor designation offered by The Exit Planning Institute, streamline lead generation and maintain consistent engagement with a purpose-built digital marketing solution like Attract offered by Maus Software and automate the Value Acceleration Methodology with Engage, the leading exit planning platform in the world. Embracing exit planning, financial advisors can transform their practices, create lasting client partnerships, and secure a sustainable path for growth.
Additional Resources:
- For more information about the Certifier Exit Planning Advisor designation, check out the CEPA Credentialing Program
- For more information about done-for-you digital marketing for FA CEPAs, check out Attract+ by Maus Software
- For more information about using software to automate your exit planning practice, schedule a call with a Maus CEPA Specialist
References
- Barron’s. (2023). Financial Advisors Increase Lead Conversion Rate.
- Exit Planning Institute. (2023). State of Owner Readiness Report 2023.
- SBA Department of Advocacy. (2023). Frequently Asked Questions About Small-Business.
- Kitces, M. (2024). KPIs To Track Your Advisor Marketing And Figure Out What’s Actually Working.
