Frequently Asked Questions

Answers about 3xEquity and how our financial advisor solutions can better help you plan your future.

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Q Who is 3xEquity?
A 3xEquity was founded by one of the top financial planning companies in the country. We have analyzed hundreds of practices, purchased several, and have passed on many. 3xEquity is positioned to purchase, partner, or provide financing for your practice. We can also bring buyers and sellers together from across the country.

We are located in Kirkland, Washington.
Q Why does the value of my practice seem low/high?
A It could be based on a multiple of factors. Namely, the higher your total recurring revenue, the higher your multiple; the lower your total revenue, the lower your multiple. If you have a negative outflow of assets (i.e., attrition), your future valuation will be lower than the practice that is growing. Finally, the age of your clients significantly impacts your valuation.
Q Why don’t you emphasize expenses or profitability in your tool or modeling?
A We do. We discuss it in detail in the Custom Benchmark Report.
Q Why don’t you emphasize assets under management (AUM) in your tool or modeling?
A We do. We discuss it in detail in the Custom Benchmark Report.
Q Why don’t you emphasize velocity (i.e. the measure of the revenue being derived from the existing AUM)?
A Contrary to what some people think, high velocity could command a lower multiple, not a higher multiple. High velocity doesn’t leave much, or any, room for the buyer to maximize opportunities in the practice; the seller has already maximized most of the opportunities.
Q Why don’t you discuss risk as an important factor in the valuation?
A Risk consists of a multitude of factors including client mix, number of clients, transferability of clients, skill set of replacement advisor, client satisfaction, continuity of staff, and assets per client. It even consists of how you structure the deal with regard to taxes.
Q What about taxes?
A The more both parties negotiate, compromise, and understand the tax implications, the better the process typically goes. We know one thing for sure: the IRS wants everything taxed as ordinary income, and the seller wants everything taxed as capital gains (i.e., goodwill). There will need to be a compromise.
Q Confidentiality — How do I know my information is secure and that 3xEquity won’t distribute my data?
A Per our Privacy Policy and Terms and Conditions, 3xEquity maintains privacy and confidentiality with all data and information gathered on the 3xEquity website, and, unless agreed upon by the party, will not disclose any data outside 3xEquity.
Q Age — Why do you put so much emphasis on age and generation planning?
A According to studies, if advisors do not have generation planning with their clients, the practice can expect to lose close to 95% of its assets upon the death of the clients. Inevitably, our clients get older. We must plan for that.
Q Can you draw up the contract on the purchase or sale agreement? Do you offer services on succession planning?
A 3xEquity can refer you to resources for succession planning.