You nailed the Discovery Meeting and breezed through the Engagement Meeting with your client. 

Now it’s time to discuss fees. 

As a financial or business advisor, you must be prepared for the inevitable question, “How much will this cost me?” Simply quoting a price will not suffice. You need to set the stage for the conversation by explaining the value and benefits of Exit Planning. 

Before we dive in, be sure to check out the first two blogs in this series: The Discovery Meeting  and The Engagement Meeting are essential to the Exit Planning Process!

Benefits of an Exit Plan

An Exit Plan is not just about selling the business for the highest price possible. It’s about creating a roadmap for the future of the business, its employees, and its owner. An Exit Plan helps business owners: 

• Identify their goals, objectives, and concerns, and then develop a strategy to achieve those goals while minimizing risks.
• Create a sustainable business that can continue to operate even without them. 
• Create a succession plan, which ensures that the business continues to thrive even after the owner retires or leaves.
• Maximize the value of their business. By identifying the business’s strengths and weaknesses, an Exit Plan helps the owner create a strategy to maximize the business’s value, making it more attractive to potential buyers or investors.
• Protect their assets and reduce risks. By creating a comprehensive estate plan, business owners can ensure that their assets are protected and passed down to their heirs without any issues. 
• Identify potential risks and develop strategies to mitigate them, ensuring the long-term success of the business.

Overcoming Advisor Apprehension

One of the major concerns that advisors have when it comes to Exit Planning is naming the price. Charging $2,500 for a financial plan, estate plan, or a tax return is one thing, but asking for $10,000 to $50,000 for an Exit Plan can be quite intimidating for both the advisor and the business owner.

It’s understandable why advisors might be apprehensive about quoting value-based fees when they’ve never done it before. Moreover, newly minted advisors might expect business owners to be shocked at the price, making them even more apprehensive.

However, it is essential to remember that creating an Exit Plan is a complex and time-consuming process that requires a lot of expertise, knowledge, and experience. It is not just about filling out forms or providing generic advice. Instead, it involves a deep understanding of the business, its owner’s goals, and the current market conditions.

Therefore, charging a premium for such a service is justifiable. Properly explain to the business owner that the benefits of planning far outweigh the costs. Advisors must help their clients understand that the financial and emotional rewards that they will receive from an Exit Plan far exceed the fees for creating one.

Pricing Strategies

There are a number of different pricing strategies that you can use when quoting the price of an Exit Plan. Determining a fee structure will depend on the owner’s unique situation and needs. Let’s take a closer look at some of these pricing strategies.

Exit Planning Advisors use different strategies to offer their services to business owners: 

• The All-In Strategy quotes a single price for expertise, advice, and counsel for plans costing $3,000 or less. 
• The 50/50 Strategy requires 50% of the fee upfront for plans costing between $7,500 to $12,500. 
• The Monthly-Retainer Strategy involves small monthly payments for a specified period, usually one year.
• The Phased Exit Plan Strategy breaks down the planning process into manageable stages. 
• The Hourly Pricing Strategy is not recommended for Exit Planning since pricing based on the overall value of the plan helps owners understand its true cost and benefits.

For a more in depth overview of various pricing strategies, check out our blog post: Exit Planning Fees: Strategies and Tips for Advisors!

The Bottom Line

Creating an Exit Plan is a vital process for any business owner looking to retire or transition out of their business. While the cost of an Exit Plan might seem hefty, the benefits that business owners will receive far outweigh the costs.

Advisors must understand that charging a premium for such a service is justifiable, given the complex and time-consuming nature of the process. Moreover, advisors must help their clients understand the benefits of an Exit Plan, which include creating a sustainable business, maximizing the business’s value, protecting assets, and reducing risks.

Advisors new to Exit Planning are likely to be more concerned with the cost of the planning than their owner-clients. Therefore, it is essential to properly educate both the advisors and the business owners on the benefits of an Exit Plan, ensuring a smooth transition and a successful future for the business.