About Ashley Quinton

With over 20 years professional experience, Ashley possesses a unique set of accounting, taxation, business planning and development, wealth management and technology skills.

He has held senior roles in prominent Accountancy firms, as well as leading his own practice advising private clients on business and tax effective wealth accumulation strategies before joining Prosperity Advisers Group.

Today, Ashley strives to maintain strong, long term relationships with clients offering technical knowledge and proactive solutions to grow their business and personal wealth.

Attention practice owners! Now is the time to see if your practice is well positioned to provide you with a healthy retirement.

Senior couple meeting financial adviser for investment

We all know that by establishing regular health and dental checks we’ve got a greater chance of preventing problems throughout our lives.

It’s the same reason for establishing regular financial and strategic reviews of your professional practice. Done regularly, this will help you keep focused on identifying key value drivers to maximise the value of your hard earned business investment and to effectively manage risks, potential weaknesses and/or threats.

Effective strategic and succession planning will help you position your practice to maximise value and make your business investment work for you during retirement. What exactly is succession planning? It’s a strategic process which allows you to transition your equity ownership by way of whole or part sale to fund your ongoing income during retirement.

When to do succession planning?

To be successful, it’s about starting early and preparing for the long term. You need to formulate a plan to assess your current position, set out what you want to achieve and develop and implement a plan for getting there.

A new financial year is a great time to reflect on previous year performance, to assess your progress towards achieving your retirement goals and provides an opportunity to identify new strategies for optimal growth, profitability and performance.

Working ‘on’ vs ‘in’ your practice

The first step is investing time to work on your practice, reviewing key business performance measures and industry trends:

  • Review financial performance including key performance indicators and use this to compare and benchmark with other successful and leading practices in your industry.
  • Review key trends in relation to government, industry, technology, staffing and resources, client/ patient needs and innovation.
  • Identify opportunities, strengths, weaknesses and threats.

Step by step plan

The next step is to plan ahead, to identify and prioritise key initiatives for the next 12 months aimed at driving revenue growth, improving profitability, cash flow, performance and ultimately increasing the equity value of your practice.

Some key initiatives include:

  • Reduce reliance on your own personal exertion and knowledge, make the business worth more without you. How? Consider leveraging from other professionals and team members, increasing the scale of your business, training key staff, investing in professional development to enhance level of care and maximising leveraging within the organisation by introducing an effective structured team. Introducing incentives and rewards to encourage performance improvements would also assist.
  • Establish client relationships linked to the practice and its brand; not just the individual.
  • Develop systems and processes to reduce reliance on key people within the practice.
  • Reduce potential threats (including the Medicare freeze, changes to pathology rent agreements etc.) by increasing the range of services offered, introduce private billing, select the right service mix to maximise profits and identify cross service opportunities.
  • Introduce new technology to improve client service and build effective client relationships.
  • Enhance patient services utilising data analysis and management tools to identify patients who would benefit from proactive collaborative care.
  • Effectively use debt to provide capital to expand and grow your practice by acquiring other practices. This strategy can potentially lead to increased revenue growth, profitability and a higher return on investment. It’s important to seek advice and manage the risks, especially during the due diligence process.
  • Review the gap between the value the practice is worth now and the value it needs to be when you plan to retire. Consider which of the activities in this article will help you maximise the value of your practice, to ensure it’s sale ready and easily transferable to the new owners when the time comes.
  • Make it easier for the purchaser to finance goodwill. Banks will generally support finance funding for goodwill when there is evidence of a comprehensive business and succession plan, financials to support future maintainable profits and an accountant report which assesses key risk and value drivers for the business.
  • Increase the tax effectiveness of your invested capital by planning ahead to ensure you maximise the use of available small business capital gains exemptions. Structure the sale contract to favour your after tax outcome and direct the proceeds of sale to an appropriate structure (superfund, family trust, next generation trust etc.) to protect your wealth and maximise after tax returns.
  • Prepare your estate planning. Having a professional will, powers of attorney and superannuation binding nominations is a big part of succession planning. Make sure your wishes are well known by those around you to ensure your estate is managed in the way you want.

Break down the activity

Take charge of your business to ensure it’s well positioned for the road ahead. Select and focus on 5 key initiatives for the next 3 months, reflect and measure the benefits achieved and prepare for your next strategic planning cycle.

Too many times we see professionals retire who haven’t spent the time during their career to determine how they will fund their retirement years. This can mean having to work well into their later years just to get by. If you start early, you can make the most of your business so it can be a big nest-egg for your future.

Effective Asset Protection – Control the risks and protect your wealth

“It won’t happen to me”, “It is unlikely I will be sued,” and “I have insurance” are things we as Accountants hear our clients say all the time in our day-to-day activity.  Occasionally these statements are tested when something unexpected happens in someone’s life or business, and sadly, for those without a good approach to risk management, the outcome can be devastating.

Rarely do many of us stop and take a good look at our lives, to recognise changes in our personal and business situation and to take time out of our busy schedules to focus on the protection of our hard earned wealth.  Good risk takers find the time to work with a diligent adviser to oversee and ensure their wealth building plans are not easily undone.

An effective asset protection strategy is about reviewing and understanding the risks and adopting measures to protect family and business assets.

Many people think that lawsuits only apply to high risk occupations such as obstetricians, engineers and professional advisers.   Sadly, this is just not the case.  In fact litigation is becoming quite common and its prevalence continues to increase in Australia.  Quite often, if not carefully examined, you may find your insurance policy does not actually cover what you expected.

Recently I was speaking to a family colleague, his wife was caught in a defamation claim, the home was in her name and unfortunately they did not have an asset protection strategy in place. While it was no fault of her own, they had to settle the claim. With careful planning and implementation of a well designed trust structure including an equity protection solution for their home, they would have had a much greater degree of protection from the legal claim. Not long after, I met with one of our new clients for a preliminary risk review.

Identifying the risks
Our client owns a successful engineering business. As part of our strategic review process we conduct a business and personal risk review which examines each of the items below:

  • We confirmed the engineering business was operating through a hybrid unit trust structure which had been set up years prior. The trust was the ideal structure to run and operate the business. All the business assets were owned by another asset protection trust and therefore adequately protected. The trust deed did however require an upgrade to ensure that it was covered for recent legislative changes.
  • Recently an offer was made to two employees of the business to become equity owners. The problem with the unit holders agreement was the absence of a clear succession plan and in addition to this no funding mechanism to protect the business owners if one decided to sell, retire, was required to leave due to health reasons, disability or traumatic illness; or unexpected death.
  • We confirmed that the key person, skill retention and emergency management plans and policies were in place.
  • We found the family residence with no mortgage, was owned in the clients wife’s name, which provided a reasonable degree of asset protection.
  • Upon inspection of the portfolio of investments (property/ shares/cash), we found all were protected appropriately by insurances and appropriate asset structures except for one property in the husband’s name. All other assets owned either in their family investment trust their superannuation fund.
  • We looked over the couple’s personal insurance cover confirming that the family was adequately covered.  We did however update some of their policies to take advantages of important new features and more favorable clauses offered by other insurance providers.
  • We checked to see that general insurance, health cover, professional indemnity and business insurance was all in place and adequate, finding the only deficiency was that the professional indemnity had not been updated to cover a new area of service the business was operating in.
  • We confirmed they had completed binding nominations for their superannuation and nominations for their insurance in accordance with their estate planning review. We had previously arranged for their wills to include discretionary testamentary trusts which are created upon death. The trusts are designed to protect personal assets for future generations (Children/ Grandchildren) from potential creditors, bankruptcy and/ or due to marriage/ de facto breakdown.

Issues identified 
Key to these issues was the fact that our client had structures and estate planning in place to protect their assets.  We had concerns about the risks of holding the equity in their home in the wife’s name and the property in the husband’s name.  The goal was to remedy this without incurring significant transfer costs of stamp duty on the properties and capital gains tax on the investment property.

We arranged for an equity protection strategy and implemented the following:

  • Establish a family investment trust controlled by the parents for the benefit of their beneficiaries (children, grandchildren and other family members). The trust structure designed to protect assets from potential creditors, bankruptcy and for future generation from a claim due to marriage/ de facto breakdown.
  • Arrange for legal documents to gift the equity to the family investment trust without incurring tax costs.
  • Implement legal documents, registrations and security documents to take a first mortgage over the properties.

This strategy achieved the same level of asset protection as transferring the properties to a family investment trust without incurring substantial taxation costs. This also gave the couple peace of mind that the assets in personal names are also protected.

We were also keen to put in place a formal unit holders agreement to include the transfer of ownership to the surviving equity owners rather than transfer the ownership to the executor of the estate. This would occur at the time the estate is paid from the insurance policy in the event of death or disablement. The policies also owned by the appropriate structures to ensure tax efficiency.

The overriding thing to remember is that while accidents and incidents might happen in life, significant financial downside risk can be prevented with proper planning.

As a practicing accountant and financial advisor for over 20 years, I have heard of many other unfortunate business lawsuits, family disputes, financial setbacks which with some legitimate and sensible asset protection strategies could have been avoided.