Kimble Brokers, a well-established independent financial advisor firm in Carletonville, has decided to merge its operations with the GCI group. Rob Kimble, MD and founder of Kimble Brokers, says the rationale for the move is twofold.
“As the business has grown over the years, we have found ourselves in the classic bind that all independents find themselves in, with too few resources to service our clients as we would wish, particularly as I am myself looking towards retiring,” he explains. “The second reason also relates to a common challenge for independents: how to preserve my existing income stream into retirement.”
“GCI’s model made compelling sense because it will put the resources of a much larger group behind Kimble Brokers to the benefit of our clients, and I will benefit from a steady income stream into retirement that is related to how well the business is doing,” says Kimble.
Joshua Marran, Mergers Specialist at GCI, says that GCI has refined a model that will allow independent financial advisories like Kimble Brokers to achieve sustainability, to the benefit of both their clients and principals. “Independent advisors like Rob have built up a successful business but need a way to provide both for their clients and themselves over the longer term,” he says. “From our side, the benefit is that we gain the experience and expertise of such individuals, and access to their client base.”
Typically when an independent financial advisor decides to retire, the only option is to sell the company to one of the large brokerage houses for a price that is typically one or twice times the annual turnover. Unfortunately, this capital sum does not generate anything like the income the advisor had been used to, and the clients tend to drop away.
GCI’s carefully designed process incorporates a lengthy handover to ensure that clients buy into the transition and remain on board. GCI assumes responsibility for all the firm’s expenses, including staff, offices, IT, compliance billing and payroll. As they take over the clients, the GCI team members continue to pay a share of all the initial and recurring fees to the retiring advisor for his or her lifetime plus six years.
“If you crunch the numbers, the typical financial advisor who merges his or her business with GCI benefits from an income stream that can equate to 10 times the current revenue of the business, a substantial improvement on the usual multiple of one to two,” Marran says.
“GCI’s goal is to change the face of retirement for all South Africans. By creating this model to help financial advisors realise a good return from their life’s work, we are not only helping our fellow professionals retire safely and securely but also ensuring their clients’ retirement plans remain on track – a genuine win-win,” concludes Marran.
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