Why sharing some of tomorrow’s value could help IFA owners protect the business they have built today

For many Financial Adviser business owners, some of the most valuable assets in the business leave the office every evening.

Experienced advisers, paraplanners, managers and other key employees often hold important client relationships, technical knowledge and much of the goodwill on which an advisory business depends. Losing the right individual can therefore cost considerably more than their salary.

Pay rises and bonuses have their place. But they rarely create a long-term connection between an employee and the increasing capital value of the business.

That is why more Financial Adviser business owners should be asking:

Could I give my key people a stake in the future value of the business without giving away the value I have already created?

In many cases, the answer is yes.

EMI – often the obvious place to start

For a qualifying owner-managed IFA business, the Enterprise Management Incentive (EMI) will often be the first scheme to consider.

An EMI does not necessarily involve handing shares to an employee today. Instead, selected employees are granted options allowing them to acquire shares in the future, usually subject to conditions such as remaining with the business, achieving agreed objectives or the company ultimately being sold.

This makes EMI an extremely flexible retention tool. The owner can choose who participates, how much they receive and what they need to do to benefit.

The tax treatment is also highly attractive. Where properly structured, there will normally be no Income Tax or National Insurance charge on the increase in value between the grant and exercise of an EMI option, with subsequent value generally falling within the Capital Gains Tax regime.

EMI also became available to substantially more companies from 6 April 2026. For most qualifying companies, the gross asset ceiling increased to £120 million, the employee limit to fewer than 500 employees, and the overall company EMI option limit to £6 million. An individual employee may potentially hold qualifying EMI options over shares worth up to £250,000 when granted.

“But I was told an Financial Advisers cannot qualify for EMI”

This is an important misconception.

The EMI legislation does exclude certain financial activities. However, that does not mean that every business operating in financial services is excluded.

HMRC’s guidance distinguishes financial activities involving the lending of money or bearing of customers’ financial risk from businesses providing financial advice or acting as intermediaries. The provision of services such as financial advice is not itself within the financial activities exclusion, and intermediary businesses such as advisers and brokers may qualify where they are commercially independent and do not themselves bear the underlying financial risk.

Consequently, an FCA-regulated Financial Adviser should not simply assume that EMI is unavailable.

The precise activities and structure of the business need to be reviewed, but many advisory businesses which have previously been told that they cannot qualify may merit another look.

Growth shares – don’t give away yesterday’s value

This is where the planning can become particularly interesting.

Suppose you have spent 20 years building a business now worth £5 million. You identify a key individual whom you want to retain and ultimately give a 5% economic interest.

Giving them 5% of the company today potentially gives away £250,000 of value which you have already created.

That may not be what you intend.

Instead, it may be possible to create a separate class of growth share which participates only in value above an agreed hurdle.

If the business is worth £5 million today, for example, the employee’s growth shares might participate only in future value above £5 million.

The owner therefore protects the value accumulated to date while saying to the employee:

“Help me build the next £5 million of value and you can share in what we create together.”

Growth shares are not themselves a separate tax-advantaged scheme. They are a type of share which can, where the conditions are satisfied, be used very effectively in conjunction with EMI options.

For a business owner contemplating a sale in perhaps three, five or seven years, this can create a very different mindset amongst key management.

It converts an employee from someone receiving a salary and annual bonus into someone with a genuine financial interest in helping to increase the eventual sale value of the business.

What are the alternatives?

EMI will not always be available or appropriate. There are several other arrangements which should form part of the discussion.

Scheme	In brief	Particularly useful where
EMI	Tax-advantaged options for selected qualifying employees	The owner wants to retain and incentivise particular key people
EMI with growth shares	Options over shares participating principally in future value	The owner wants to ring-fence the value already built up
CSOP	Tax-advantaged discretionary option scheme, currently allowing options over up to £60,000 of shares per employee	EMI is unavailable but selected employees are to be incentivised
SAYE	Employees save, currently up to £500 per month, towards acquiring shares	The aim is wider employee participation rather than rewarding only selected individuals
SIP	Tax-advantaged all-employee share ownership arrangement	The objective is to develop a broad employee ownership culture
Unapproved options / growth shares	Bespoke arrangements outside the statutory tax-advantaged schemes	Maximum commercial flexibility is required and the tax disadvantages are acceptable

CSOP is discretionary and therefore allows selected employees to participate, although its current £60,000 individual option limit makes it much less powerful than EMI for a substantial senior-management incentive.

SAYE and SIP are different. They are essentially all-employee arrangements and can be excellent for encouraging a wider ownership culture, but they are generally less suitable where an IFA owner specifically wants to lock in two or three strategically important individuals. SAYE currently allows employees to save up to £500 per month, while a SIP can include up to £3,600 of free shares each year together with other forms of employee share participation.

Don’t start with the scheme – start with the person

The best employee share arrangements start with a commercial discussion, not a tax form.

Ask:

Who would cause me a real problem if they left?

Then consider what you want that individual to achieve.

Perhaps you need a senior adviser to remain for the next five years. Perhaps you want somebody gradually to take over the day-to-day running of the company. Perhaps you want to build a management team capable of supporting a future sale or management buyout.

Only then should you decide how much value they should receive and which share or option arrangement best achieves it.

A good scheme should also address what happens if the employee leaves, becomes a competitor, fails to perform or if the company is ultimately sold.

Sharing growth can protect value

Owners can understandably be reluctant to dilute their shareholding.

But the question is not simply:

“How much of my company am I giving away?”

The better question may be:

“How much more valuable could my company become if I retain the people who are capable of helping me build it?”

Giving a key employee a carefully structured percentage of future growth can be considerably less expensive than losing that employee – together with clients, relationships and knowledge – to a competitor.

For the right business, EMI combined with properly structured growth shares can align the interests of owner and employee remarkably well.

The owner protects the value already created.

The employee receives a meaningful opportunity to build personal capital value.

And both have an incentive to grow the business towards the same destination.

Could EMI work for your  business? If you are considering how to retain key advisers or senior staff, or planning towards an eventual sale or succession, it may be worth reviewing whether selected employees could participate in the future growth of the business. FS Legal Solicitors LLP advises business owners on EMI schemes, growth shares, employee incentives, valuations and succession structures. For EMI projects we can review the company’s qualifying status, consider the appropriate incentive and share structure and, where appropriate, seek HMRC advance assurance on qualifying status and agree the relevant share valuation with HMRC before the options are granted. We will assist with regulatory aspects as required. The starting point is not deciding how much of your business to give away. It is deciding how much of its future value you could protect by retaining the people who matter most.

Technical note: Tax limits and rules referred to are current as at September 2026 and should be checked at the point of implementation.