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View the article online at http://citywire.co.uk/wealth-manager/article/a741162

Reach for the parachute: does your business have an exit plan?

by Eleanor Lawrie on Mar 19, 2014 at 07:00

‘I suspect it is probably not as formalised as it might be in a larger company, as a lot of the management are close to the business, and there is not a hierarchy,’ he said. ‘In practice, the remaining partners will manage the business and find the solution, but have not done a lot of formal planning.’

Succession planning

Kirby noted that it can take at least six months to find a new chief executive if anything happens to the existing team.

‘There is a message there that we need to communicate with our clients and let them know we have not lost the plot. We also need to have some sort of succession planning, and a contingency plan,’ he said.

Matthew Hunt, founder of Prospect Wealth Management, said his firm has a number of measures in place to make sure market risk is the only liability that clients have to worry about.

‘Client assets are held in custody by a third party so if anything was to happen to Prospect, they are in safe hands,’ he said.

Prospect has personal indemnity cover and compliance services via Raymond James, but Hunt thinks these safeguards are not necessarily the norm.

‘A client is taking the risk that somebody runs off with their money if there are not proper compliance controls in place. With us, that can’t happen. If a client is investing money with us they will write a cheque to the custodian, never to Prospect.’

Key man risk

Hunt is also mindful of diversifying away key man risk. ‘The other risk is that if you are a one-man band, and they go under a bus, you have to find another manager,’ he said.

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