Evaluating the Influence of Financial Advisers in Entrepreneurial Business Exits

The UK SME sector comprises 99.9% of the UK business population and has grown by 61% from 2000 to 2021, highlighting its critical role in the economy. Entrepreneurs running these small businesses will eventually exit, which could significantly impact their finances and financial well-being.

The effectiveness of financial advisers in assisting entrepreneurs with business exits and extending to their personal financial, lifestyle, and well-being goals is unknown. There is no empirical evidence of financial advisers’ effectiveness and influence in this context.

Using qualitative research, fourteen entrepreneurs from various backgrounds and stages of their entrepreneurial journeys were interviewed, including those who have successfully exited businesses. The findings reveal that financial advisers are generally ineffective and have minimal influence on entrepreneurs. Three key themes emerged: entrepreneurs’ mindset towards financial management, a lack of knowledge and uptake of financial solutions that could improve financial outcomes, and the financial advice sector’s poor reputation that affected those who chose to work with financial advisers and those who did not. The research suggests that entrepreneurs miss financial planning opportunities for themselves, their families, and businesses, leaving them potentially financially vulnerable.

The findings emphasise that financial advisers and the financial advice sector must adapt their approach to better engage with entrepreneurs, enhancing awareness of the benefits of financial planning and addressing perceived over-compliance and regulation. Financial advisers should prioritise providing proactive, holistic advice based on individual circumstances and the type of business exit planned.

Keywords

Financial advisers
Entrepreneurs
Business exit
Influence
Financial advice sector
Financial goals b
Business advisers.

1. Introduction

In the United Kingdom, the financial advice industry offers a range of comprehensive services to support entrepreneurs—defined as individuals who establish a business venture (Hamilton & Harper, 1994)—throughout their business operations and following an exit. These services are designed to improve both business and personal financial outcomes, thereby enhancing the entrepreneur’s financial standing, literacy, and well-being.

Despite the availability of these services, there is a notable lack of empirical research on how entrepreneurs engage with financial advisers, particularly during significant events like a business exit. While many studies on entrepreneurial exits cite interactions with business advisers such as accountants, the existing literature provides little evidence highlighting the specific role and influence of financial advisers.

This research gap is significant given the UK’s economic landscape. The nation is home to over 5.5 million small and medium enterprises (SMEs), and the business population grew by 61% between 2000 and 2021 (Department for Business, 2022; Federation of Small Businesses, 2023). Concurrently, business exits have risen sharply. For instance, the number of high-growth companies sold increased from just 23 in 2011 to 781 in 2021, representing a combined value of £26.7 billion (Beauhurst & Triple Point, 2022). Such events often generate substantial wealth for entrepreneurs.

A successful exit can significantly enhance an entrepreneur’s wealth, but it requires careful personal financial planning to meet long-term lifestyle and well-being goals (DeTienne et al., 2015). However, anecdotal evidence suggests that entrepreneurs often separate their business and personal financial affairs, which can lead to missed opportunities and less favourable outcomes.

The growing SME sector and the increasing frequency of high-value business exits present a clear opportunity for the financial advice industry to play a crucial role. Yet, the extent to which entrepreneurs engage with these advisers remains unclear. Therefore, this study aims to fill this knowledge gap by investigating how financial advisers engage with entrepreneurs and influence their business and personal financial plans, particularly before, during, and after a business exit.

2. Related Literature

While numerous studies examine entrepreneurial business exits, they seldom reference financial advice as part of the process. Given the limited empirical research on the influence of financial advisers on entrepreneurs during a business exit, this paper builds on existing research from related topics to explore this interaction.

Entrepreneurship can offer significant financial rewards, often making entrepreneurs wealthier than those in paid employment. Wealth creation and maximisation are central to the entrepreneurial journey, with financial rewards such as dividends, pension contributions, and business exit proceeds manifesting at various stages of the business life cycle (Carter, 2011). However, many entrepreneurs focus on reinvesting in their businesses to enhance performance and manage revenue fluctuations, a practice that may overshadow personal financial planning (Van Ness et al., 2020; Malacrino, 2016).

2.1 Financial Planning and Business Exit

Research highlights a gap in understanding the intersection of personal financial goals and the financial requirements of running a successful business (Walker & Brown, 2004). Effective business exit strategies require self-control and clear goal-setting (Pathak, 2021). While all entrepreneurs will eventually exit their businesses, there is limited research on exit strategies and the role of financial advisers in this process (DeTienne & Cardon, 2012; Wennberg & DeTienne, 2014; Wiklund et al., 2013). This gap exists even as professional intermediaries in the UK are increasingly seeking to improve their skills to serve business clients better (Tucker, 2011).

2.2 Motives for Starting a Business

The motivations for starting a business are varied and complex. Factors such as dissatisfaction with current circumstances, autonomy, and the need for achievement drive individuals to entrepreneurship (Koellinger et al., 2007; Shane et al., 2003). Financial gain is not always the primary motivator; many entrepreneurs seek to earn a living rather than amass wealth (Van Gelderen et al., 2006).

2.3 Business Exit Strategies

Three primary business exit strategies are identified: financial harvest, stewardship, and voluntary cessation. Each has distinct financial outcomes and implications for the involvement of financial advisers.

2.3.1 Financial Harvest

Financial harvest in this context involves encashing an investment, typically through selling the business. This strategy often leads to significant personal financial gain and is preferred by growth-oriented companies (DeTienne et al., 2015; Mathias et al., 2017; Wennberg & DeTienne, 2014). Entrepreneurs who plan for a financial harvest exit usually follow a causation-based approach, focusing on profit maximisation (Sarasvathy, 2001).

2.3.2 Stewardship

Stewardship strategies prioritise the firm’s long-term viability, often through family succession or employee buyouts. These strategies are less financially lucrative but offer stability for the business and its stakeholders (DeTienne et al., 2015; Bertschi-Michel et al., 2021; Cesaroni & Sentuti, 2017).

2.3.3 Voluntary Cessation

Voluntary cessation involves the entrepreneur disbanding the venture, often seen in sole proprietorships or short-term opportunities. This operationally simple strategy usually does not include a structured financial planning process and is less studied in academic literature (DeTienne et al., 2015).

2.4 Strategy and Financial Planning

Strategic planning is essential throughout the business cycle, from inception to exit. Entrepreneurs often rely on intuition rather than formal business plans (Anantadjaya, 2007; Van Gelderen et al., 2006). Integrating strategic thinking with entrepreneurial activities can enhance business performance and wealth creation (Hitt et al., 2001; Balasundaram, 2009).

2.5 Use of Business Advisors

Entrepreneurs frequently engage business advisers, such as accountants and lawyers, to achieve their objectives. These advisers positively impact entrepreneurial self-efficacy and well-being (Van Gelderen et al., 2006; Ardley et al., 2016). However, there is limited research on the role of financial advisers in this context (Stone et al., 2017).

2.6 Trust and External Advisors

Trust is critical in the relationship between entrepreneurs and their advisers. Trust is critical in the relationship between entrepreneurs and their advisers. Advisers must build relational security and apply specialised knowledge to gain entrepreneurs’ trust (Quarchioni et al., 2022; Ardley et al., 2016). Financial advisers are often distrusted despite their potential benefits, highlighting the need for improved trust-building strategies (Monti et al., 2014; Burke & Hung, 2021).

2.7 Financial Literacy and Well-being

Financial literacy is crucial for entrepreneurs to make informed financial decisions and enhance their well-being (Taft et al., 2013; Wiklund et al., 2019). A notable gap exists in understanding how entrepreneurs maintain and improve their financial literacy throughout the business cycle (Heleta, 2014; Ćumurović & Hyll, 2019).

In summary, the existing literature provides valuable insights into the entrepreneurial journey, from initial motivations and strategic planning to financial literacy and the necessity of trust in advisers. It clearly outlines various exit strategies and their financial implications. However, a significant and recurring gap emerges throughout this review. While the roles of advisers like accountants and lawyers are acknowledged, there is a clear lack of empirical data on the relationship between entrepreneurs and financial advisers. Consequently, the influence and effectiveness of financial advisers—particularly during the critical phase of a business exit—remain poorly understood and present a compelling area for investigation.

3. Data and Methodology

This study adopted a qualitative approach to understand behaviours and experiences, which are essential for capturing the nuanced and multi-layered process of business exist strategies and the personal goals of entrepreneurs. Quantitative research, characterised by deductive reasoning and numerical analysis, was deemed inappropriate due to a lack of existing theory to confirm.

To avoid bias, I did not interview anyone with whom I had a professional relationship. A snowball sampling method was used, initially involving entrepreneurs known to the author and later expanding through referrals. This approach secured a diverse group of 14 interviewees, including individuals at different stages of their entrepreneurial journey and with varying exit strategies. This diversity was crucial for achieving comprehensive data collection. While a broader data collection could have been completed, time limitations prevented it.

Entrepreneurs were asked to consider their entrepreneurial journey, exit plans, financial and lifestyle goals, strategy, use of business advisers, effectiveness of financial advice, and financial literacy and well-being. Semi-structured interviews were chosen over structured ones to allow for flexibility and deeper exploration of topics based on participants’ responses. This method facilitated a richer understanding of the entrepreneurs’ experiences and perceptions.

Interviews were conducted face-to-face, when possible, to build empathy and trust; otherwise, they were conducted via video calls. All interviews were recorded, and participants provided consent for recording. The duration of the interviews varied, with most lasting around one hour.

The main risks identified were participant and researcher bias. I mitigated these risks by maintaining impartiality and not expressing personal opinions during interviews. The interviews were treated as pure data collection exercises, adhering to an agreed-upon schedule. Conducting interviews in a suitable environment was also crucial to ensure high-quality data collection.

Ethical considerations were paramount throughout the research. Participants were informed about the study’s nature, assured of their anonymity, and given the right to withdraw at any time. Consent was obtained from all interviewees.

Once the data was collected, thematic analysis was employed to establish interviewees’ views, opinions, knowledge, experiences and values.

4. Empirical Results

4.1. Introduction

Considering the factors highlighted within the existing literature, the following summarises the research’s findings:

4.2. How the Interviewees Became Entrepreneurs

Various personal, familial, and situational factors influence the decision to become an entrepreneur. The interviews reveal that motivations for becoming entrepreneurs were diverse and multifaceted. Many interviewees cited dissatisfaction with corporate environments and a desire for autonomy as primary reasons for starting their businesses. This desire for independence was often accompanied by a drive to escape corporate life’s hierarchical and sometimes restrictive nature, seeking instead the freedom to innovate and control their destinies.

Family influence played a crucial role for some entrepreneurs. Several interviewees joined family businesses, continuing a legacy or bringing new ideas to existing operations. This familial path often provided a support system and a foundation of experience, facilitating the transition into entrepreneurship. However, the influence of family was not always positive. For instance, one interviewee was driven by a rebellious spirit against her father, indicating that family dynamics can motivate entrepreneurship through a desire to forge an independent identity.

In addition to these motivations, unique personal reasons also emerged. One interviewee, for example, expressed a strong desire to challenge societal norms and expectations, using entrepreneurship as a platform to enact change and express personal values. Such motivations highlight the diverse and individual nature of the entrepreneurial journey, where financial success is often intertwined with personal fulfilment and societal impact.

4.3. Business Exit

The concept of business exit is integral to the entrepreneurial lifecycle and encompasses how entrepreneurs plan to leave their businesses. The findings indicate that three interviewees exited their businesses through financial harvest, successfully selling their enterprises for a profit. This route often involved significant planning and positioning the business for sale, ensuring it is attractive to potential buyers.

An additional nine interviewees expressed intentions to exit their businesses through similar means. However, these entrepreneurs prioritised intrinsic rewards over extrinsic rewards, like financial gains. The motivation to exit was not solely driven by the desire for monetary gain but also by the personal satisfaction of having built a successful venture. Many interviewees viewed their businesses as extensions of their identities and took pride in their accomplishments, making the decision to exit a complex and emotionally charged process.

Furthermore, the interviews revealed that many entrepreneurs do not see business exits as final endpoints but as transitional phases in their entrepreneurial journey. Post-exit plans often included starting new ventures, investing in other businesses, or engaging in mentorship and advisory roles. This continuous engagement in entrepreneurial activities underscores the dynamic nature of entrepreneurship, where the exit from one business can serve as the starting point for new opportunities and ventures.

4.4. Strategy

Strategic planning is a critical component of business success, yet the approach to business strategy among interviewees varied significantly. Several entrepreneurs admitted to starting their ventures without formal business plans. This lack of initial planning was often attributed to their business inception’s spontaneous and opportunity-driven nature. However, as the businesses grew, the need for strategic planning became more apparent.

The frequency and rigour of updates varied among those who developed business plans. Some entrepreneurs regularly update their strategic plans to reflect changes in the market, new opportunities, and evolving business goals. This proactive approach to strategy enabled them to stay agile and responsive to external changes.

On the other hand, some interviewees admitted to not correlating personal finances with their business strategies. This disconnect sometimes led to financial challenges, as personal financial stability was not always aligned with business performance. In some instances, spouses managed personal finances, providing a division of labour that allowed the entrepreneur to focus on the business. However, the degree of involvement and financial integration varied across different cases.

4.5. Business Advisers

The interviewees frequently used business advisers. All participants worked with accountants, but the nature of these relationships ranged from purely transactional to receiving proactive advice. Accountants were often seen as essential partners in ensuring regulatory compliance, managing taxes, and providing financial reports. However, the level of strategic input from accountants varied, with some entrepreneurs viewing them as critical advisers and others seeing them as necessary but limited in scope.

Seven, or 50%, of interviewees engaged with financial advisers, typically maintaining long-term relationships. Financial advisers provided valuable input on investment strategies, retirement planning, and wealth management. However, financial advice was often perceived as reactive and predominantly focused on personal rather than business finances. This reactive nature of financial advice was a point of contention for some entrepreneurs who sought more proactive and integrated advisory services. None of those entrepreneurs who had completed business exits proactively worked with a financial adviser throughout the process.

The interviewees’ perceptions of financial advice were mixed. While some appreciated the sector’s professionalism, others criticised it for being overregulated and primarily focused on self-protection. Ongoing negative media coverage, high entry criteria, and past negative experiences were cited as significant deterrents to some entrepreneurs seeking financial advice. Further barriers included complex regulatory requirements, perceived high fees, and a need for more alignment between adviser interests and client needs.

Despite these challenges, the value of good financial advice was recognised, with entrepreneurs acknowledging the importance of having knowledgeable advisers to navigate complex financial landscapes. The mixed perceptions highlight a need for more accessible, transparent, and client-focused financial advisory services that cater to entrepreneurs’ unique financial needs.

4.6. Financial Literacy and Well-being

Financial literacy is critical to entrepreneurial success, influencing decision-making, risk management, and long-term financial stability. The self-assessment of financial literacy among interviewees varied, with most rating their financial literacy as average and only a few considering themselves highly literate. Financial literacy was primarily acquired through experience and advice from business advisers, underscoring the importance of practical, hands-on learning In addition to formal education.

Conversely and strikingly, compared to financial literacy, the interviewees exclusively believed they had high financial well-being. Thus, they did not show any correlation between high financial literacy and financial well-being. This could relate to some interviewees, as several had sold a business or had built wealth from previous employment, although this was not exclusive. The interviewees covered a wide demographic and were at various business cycle stages. None demonstrated any concern for their financial well-being. All confirmed the absolute belief that they would be fine financially and were in a good place from a well-being standpoint. Entrepreneurial spirit and the drive and ambition to carry on being involved in a business was the common consensus.

5. Discussion

The data suggests that financial advisers must add more value to entrepreneurs on their journey to business exit. This extends to entrepreneurs who have completed a business exit and also includes entrepreneurs’ personal financial planning and lifestyle goals. The data demonstrate that financial advisers have little or no influence on the entrepreneurial community. The following sub-chapters discuss the main themes and implications this study has uncovered.

5.1. Financial Mindset of Entrepreneurs

The results of this study concur with Kuratko et al. (1997). All interviewees highlighted intrinsic rewards as the reason they became entrepreneurs, with many stating autonomy, recognition, and gratification in meeting the challenge of why they started their businesses. However, whilst Kuratko et al. (1997) claim that entrepreneurs are drawn to entrepreneurship by the allure of extrinsic rewards, like acquiring personal wealth, the findings of this study disagree. Overall, interviewees explicitly highlighted this point; creating wealth was almost seen as a by-product, with intrinsic rewards being the main drive for becoming an entrepreneur. This is demonstrated by one interviewee stating, “It’s never been about the money. It’s totally about freedom and thinking there’s another way this could be done.”

This conclusion creates a surprising paradox, as financial harvest was the most planned and transacted business exit strategy. So, on the one hand, the entrepreneur has exited or plans to exit their business at maximum value. Still, the personal financial reward from this transaction is seen as insignificant. These findings agree with DeTienne et al. (2015), who state that financial harvest is the most popular exit strategy focusing on maximising financial returns. However, like the motivations for becoming entrepreneurs, there is a disconnect with this research, where it’s evident that personal financial gain was not a priority for any of the interviewees. Intrinsic rewards were the main factors that DeTienne et al. (2015) cite as critical components of a stewardship business exit. Thus, this research demonstrates a fluidity between financial harvest and stewardship business exit strategies entrepreneurs engage in.

No evidence was presented that financial advisers appreciate entrepreneurs’ financial aims and goals. This disconnect likely results in inadequate service and offerings, especially when considering entrepreneurs’ business and personal goals. This potentially can leave the entrepreneurs unknowingly financially vulnerable and unable to achieve their future objectives. It can also limit the levels of empathy that can be built, thus hindering the ongoing relationship with the entrepreneur and future financial planning opportunities. Financial advisers should fully understand and appreciate entrepreneurs’ ambitions initially and continuously and not be seen as transactional or reactive.

A reason that can explain this is that most interviewees cited that they will be entrepreneurs for as long as possible. This could be via a lifestyle business or an entrepreneur repeatedly starting new ventures, even after exiting previous businesses with high financial gain (one interviewee had sold a previous business at an eight-figure sum and was involved with five new ventures). Interviewees focussed more on their business aspirations than their own, including financial ones. Consequently, this can be viewed as one reason financial advisers have little effect or influence on entrepreneurs regarding business exit – it’s not of high consequence in the entrepreneur’s mind. Whilst most entrepreneurs interviewed were looking to continue in business, none demonstrated what they would do if they could not do this. Events like long-term ill health, for example, can impair the ability to work, limiting financial outcomes and the ability of entrepreneurs to follow future aims, objectives, and passions. This unexpected disconnect continues when examining how the interviewees strategise. All started their businesses with a planned causation strategy, as highlighted by Sarasvathy (2001). However, most did not draw up initial business plans, preferring intuition and cognitive abilities, as explained by Anantadjaya (2007). DeTienne (2010) states that if entrepreneurs develop an exit strategy, they will be more likely to exit successfully. It was evidenced that interviewees who plan to exit their business in the relatively short term had drawn up formal business/ exit plans. This research found that the interviewee’s focus and strategy on planning for business exit increased with time and events. However, whilst employing strategy from the outset of starting their businesses to varying degrees and ongoing, this research uncovered two key points:

When using strategy, interviewees did not correlate their business and personal finances and goals, including interviewees who had already completed a business exit; this is extended to those who worked with financial advisers, which is noteworthy.
This judgement is emphasised when two interviewees delegated their financial planning to their wives, leaving them to focus on their businesses, with no evidenced crossover.

With this premise in mind, all interviewees, bar one, recognised that they had missed financial planning opportunities but did not demonstrate significant concern with this fact, a conspicuous and extraordinary verdict. Based on the findings, it is likely that entrepreneurs are financially disadvantaged by not correlating their business and personal finances. This could result in them having reduced or impacted finances to pursue their ongoing personal and business goals and passions. If entrepreneurs were aware and fully appreciated the financial solutions available, the apathy they demonstrated could change.

Financial well-being was another area in this research that produced unanticipated findings. Whilst most interviewees viewed their financial literacy as average, all demonstrated they had high levels of financial well-being, therefore refuting Taft et al. (2013), who argue that a higher level of financial literacy is followed by increased financial well-being. All interviewees agreed that their futures would be fine, and none showed any personal financial concerns. This is a surprising outcome, especially as interviewees were of diverse ages and the length of time they had been in business differed. This factor can be linked to all interviewees planning to continue work and many who revealed apathy in managing their finances. Another factor could be overconfidence. Koellinger et al. (2007) argue that overconfidence is an entrepreneurial characteristic and that entrepreneurs neglect available statistics of similar past and future situations that could help them form more accurate forecasts of their likelihood of success. The confidence demonstrated by interviewees could leave them financially exposed, especially if they have no appropriate financial provisions in place. Events regularly occur that financially impact businesses, entrepreneurs, and their families, such as economic volatility and life events like ill health and death. These events could have a detrimental effect, thus leaving the entrepreneur impacted or unable to pursue business and personal goals and passions. Financial advisers can help highlight and address these events. However, evidence must be presented that this regularly occurs, something that his study did not evidence.

5.2. Advice Gap

When scrutinising the use of business advisers, it was evident that interviewees sought advice from their network and third parties to increase self-efficacy. This is a point that Marshall et al. (2020) also made when they found that access to advisers helps people feel the confidence to be successful as entrepreneurs. Interviewees showed they accessed their network, like friends, family, peers, and dedicated business advisers. This agrees with the findings from (Cesaroni & Sentuti, 2017; Kubíček et al., 2020; Reddrop & Mapunda, 2015). Seven of the fourteen interviewees worked with financial advisers, which challenges Reddrop and Mapunda (2015), who do not cite financial advisers in their analysis of business advisers used by entrepreneurs in order of popularity.

My study uncovered during the interviews that entrepreneurs demonstrated a significant advice gap when considering their positions. Most interviewees cited scenarios where they had opportunities to enhance their business and personal inances that could be met with the help of a financial adviser. Interviewees presented shortfalls in areas like cash management, personal and business protection, use of tax shelters, and estate planning that could be addressed with the assistance of a financial adviser.

This could be attributed to the interviewee’s financial mindset, as discussed in the previous sub-chapter. However, this could be challenged as numerous scenarios were presented where financial advice would benefit a business, let alone the interviewees personally.

Therefore, whilst interviewees increased their self-efficacy working with other business advisers, interviewees evidenced that this did not extend to financial planning, thus creating another fascinating paradox. For example, all interviewees worked with accountants to file their tax returns. Accountants naturally utilise methods where tax liabilities can be reduced, thus benefiting the business and entrepreneur. Why do entrepreneurs not apply the same methodology when managing all their finances, as this research suggests? My study shows entrepreneurs’ demonstrable lack of knowledge and uptake of financial solutions. Hence, this evidences an advice gap. It has been demonstrated that entrepreneurs unknowingly miss opportunities to improve financial outcomes for their businesses and themselves. This can lead to them being, financially, in a more disadvantaged position to achieve their ongoing business and personal ambitions and passions. If the interviewees understood the value of the missed financial planning opportunities cited in this research, would their mindsets and views change? To address this, financial advisers need to be more proactive with entrepreneurs to educate them on the full range of ways they can add value to them. Entrepreneurs need to know and understand the solutions available and related benefits, many of which can only be recommended by a financial adviser rather than other business advisers, like accountants.

5.3. Negative Views on Financial Advisers/Financial Advice Sector by Existing Clients

Intriguingly, negative perceptions of financial advisers and the financial advice sector are not limited to interviewees who opted not to engage with them. These sentiments extend to those who maintain relationships with financial advisers, presenting a compelling conundrum.

Interviewees generally spoke positively about their long-term relationships with their financial advisers, often longer than with other business advisers, such as accountants. However, none reported that their financial advisers had influenced their business exit strategies or proactively considered their business and personal goals. This is demonstrated by an interviewee stating, “I go for him (financial adviser) for isolated advice. I don’t think he influenced… I don’t think the financial advisor influenced what I did in the business”. Instead, interviewees felt the relationship was reactive, which is discouraging. There are tools and solutions available for financial advisers to plan with entrepreneurs’ goals in mind proactively, but this study suggests these are not regularly employed. This issue is not confined to financial advisers; most interviewees noted their accountants were similarly reactive, merely filing tax returns or providing advice only when prompted. Unsurprisingly, interviewees did not indicate any collaborative efforts between their accountants and financial advisers for their benefit. My research underscores the need for business advisers to engage more proactively with entrepreneurs, highlighting a broader issue beyond financial advisers alone.

Unexpectedly, my research reveals that even those with existing relationships with financial advisers hold negative views of the financial advice sector. This perception is driven by the belief that advisers prioritise compliance and regulatory concerns over providing substantive advice. Interviewees criticised reports from advisers as overly long, formulaic, and shifting responsibility to clients rather than advisers offering clear guidance. This criticism extends to perceived overregulation, implicating the Financial Conduct Authority (FCA) and diminishing the effectiveness and influence of financial advisers not only among entrepreneurs but more broadly. An interviewee highlighted, “I think my biggest thing… I can understand why, given the mis-selling in the past, but I feel it (the financial advice sector) spends a lot of time covering itself… it’s hard for me to read through the report…. it’s like you’ve said this and blah blah blah, then here’s, like, 20 pages of boilerplate text that means I’m being FCA compliant. But it’s actually… I think it’s adding no value to me.”

6. Conclusion

This paper provides the first empirical investigation into the influence and effectiveness of financial advisers working with entrepreneurs on business exits.

Data gathered via the research demonstrates that financial advisers do not add value or effectively work with entrepreneurs considering a business exit. This extends to entrepreneurs’ personal financial, lifestyle, and well-being goals. Three key themes were identified as to why this is: the financial mindset of entrepreneurs, an advice gap created by entrepreneurs’ lack of knowledge and uptake of financial solutions, and the poor reputation of financial advisers and the financial advice sector.

This study concludes that a clear detachment exists between financial advisers and entrepreneurs regarding business exit planning, personal financial planning, lifestyle, and well-being goals. This suggests that entrepreneurs do not see financial advisers as a reference point to help gain the most value from a business exit.

Consequently, financial advisers and the financial advice sector face significant challenges in attracting new clients and maintaining long-term engagement. This impacts future business and revenue opportunities. To address this image problem, the sector must reassess how financial advice is presented to all clients, not just entrepreneurs. This includes re-evaluating regulations, processes, mechanisms, and the construction and presentation of reports to improve the perceived value and proactive nature of financial advice. Considering the substantial size of the SME sector in the UK, assessment and change as to how entrepreneurs are supported is warranted.

Due to time constraints, these findings are based on a limited number of interviews. Future research could further test the influence of financial advisers on entrepreneurs’ business exits. For example, a more comprehensive study could employ qualitative and quantitative research methods, including data provided by financial advisers.

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