- On May 22, 2017
About 30% of financial advisors are reaching retirement age over the next ten years and right now about 70% of them don’t have a succession plan or successor. On the surface, that seems to be a formula for acquisition success.
Most every advisor it seems wants to buy a quality practice, especially one located in their backyard. Unfortunately, for eager acquirers, it is a sellers market and competition for quality practices for sale is fierce. On your own, or partnered with the wrong firm and broker dealer, the challenge can be daunting.
The real volume of acquisition deals isn’t found through bulletin boards, bid sites, or from third party consultants like Advisorbox (although we do our part!).
The truth is, the real seller volume in the market you don’t hear about (outside of mega firm acquisitions) because it is done internally with two advisors within the same broker dealer.
If growth through acquisitions is a top priority, then the first thing you need to evaluate is if you are partnered with a broker dealer that not only supports your growth through acquisition strategy but also substantially increases your options and chances of acquisitions. We ask every advisor that reaches out to us “what is your firm doing to support this strategy?” The vast majority of advisors reply “Nothing”. If your firm is not supporting your growth via acquisition than your firm is missing one of the greatest opportunities for growth that the wealth management industry has ever experienced. We have identified and are coordinating with multiple firms which are implementing or have implemented internal systems to allow their advisors to take advantage of this wave of retiring advisors. Heres a simple formula: Take the # of advisors that make up your BD and multiple that number by 25% – that is the number of practices which will be for sale in the next 5-10 years. Do you have access to that flow? If not you should consider reviewing your options.
If you’re committed to the strategy of growth through smart acquisitions, then there is no bigger advantage than being partnered with a BD that offers the scale of retiring advisors each year and the resources to assist you to grow through acquisitions.
A few broker dealers facilitate hundreds of full or partial acquisitions each year, some dozens, but for most BDs there are only a few acquisitions done each year. If you’re fishing for sellers, you increase your chances of success when fishing in a stocked pond.
However, the size of the broker dealer isn’t the only factor of course. You’ll need not only quantity but a BD with dedicated resources, expertise and experience in helping their buying advisors get matched with retiring advisors.
Finding quality practices to buy is hard to do on your own. Being plugged into the right broker dealer increases your opportunities and the odds of implementing a smart acquisition growth strategy.
If acquisitions are an important part of your strategy call Advisorbox to discuss the options that can put you in the most ideal scenario for inorganic growth.