TRANSITION TALK

How to Jump to the Top of the Buyer List

Posted by FP Transitions on Apr 8, 2015 10:00:00 AM

If 95% of financial advisory practices have only one owner then most are–or should be–looking outside their own advisory for a continuity partner. You should be that partner, especially if your long-term growth strategies include acquisition.

Why should you seek this partnership?

As a continuity partner you are at the top of the list to acquire whether an exit is unexpected or not. Even if your partner is fortunate enough to never face an unplanned exit from his or her practice, you are forefront to buy it when an exit is eventually planned. Your partnership effectively takes the business ‘off the market’ years beforehand, jumping to the top of the preferred buyer list. Currently, the FP Transitions marketplace is experiencing a 50 to 1 buyer to seller ratio, so being at the front of the line before the owner even considers putting the business on the market is a HUGE advantage.

What’s in it for them?

In naming you continuity partner, an advisor gains protection and security for their practice, their family, and their clients. Should something happen to them, their estate will receive fair market value and their clients will be left in capable hands. You can’t put a number value on peace of mind.

Need help convincing them that they need a continuity plan? Show them this. The issue of continuity is fast becoming one that your clients are concerned about. And it is their responsibility to ensure their clients’ service is uninterrupted.

How do you ensure a successful partnership?

Before solidifying any agreements be sure your business and investment philosophies, your revenue sources, and your BD/Custodial affiliations align. Making a good match is an important part of the process, and crucial to a smooth transition if the agreement is ever triggered.

Once you’ve worked out all the nuts and bolts of deal terms, defined triggering events, and made the partnership official encourage your partner to share the news with their clients and family. Go a step further and make yourself available for introductions so that you are already known and trusted should you ever have to take over the practice. This ensures client comfort and helps with client retention should a transition ever take place.

What Happens Next?

A strong continuity partnership can also pave the way for a more formal succession plan or merger. Remember, a continuity plan is necessary for all responsible financial advisors, and a continuity partnership is an excellent way to cultivate a professional relationship that opens up many options for business stability and growth for both parties.

Topics: Continuity Planning, Acquisition

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