- On October 8, 2017
You went through a lot of time and effort to acquire a practice. Congratulations, take a moment to exhale, take another deep breath, and now the real work begins.
The goal of any acquisition is a successful transition and retention of the acquired clients. It’s of course the client relationships you got a loan to buy in the first place.
While you have likely been thinking through transition and retention (T&R) during the acquisition stage it’s now time to format your T&R strategy into a developed and written plan.
The particular variables to build T&R plans around are unique, and your plan should be tailored to the specific variables that apply to your acquisition, seller situation, and acquired client dynamics.
If you are buying out a senior partner or founder, and acquiring clients you already know and have been working with for years, then your variables will be different than the external acquisition where your acquired clients have never met you before and will be asked to now change both their firm and their advisor, and will need to be repapered.
Key Transition & Retention Variables to Consider and Expand On:
- Meeting acquired clients for the first time?
Think about variables like making the first impression, how you will articulate the value you bring, the first meeting dynamics and structure, and outline of the goals to accomplish in your first meeting.
- Will the clients need to be repapered?
List out the variables needed to develop an easy transfer process, having signature stickers, simple direction cover sheet, process for receiving and processing ACATs.
- How much time will be invested?
Variables to consider are any differences between your client service model and that of the sellers. What is the quantity of clients acquired and geographical demographics of your clients requiring travel? Will you be meeting with every new client in person one-on-one? How many times will you have meetings with new clients in your first 12 months? How many meetings is that? Do you have the resources needed in people and support to adequately service all new clients?
- Is the seller retiring before or after their time?
Will the acquisition be a shock to the seller’s clients or expected? Has the seller essentially already been in retirement mode for the last few years and has been underservicing and disengaged with most of their client base for a while now?
- Has the growth trajectory been up, down or flat?
Variables vary for approaching a practice in decline vs. one that consistently experiences a strong growth rate. Are changes required? Will you be modifying your practice approach to more closely represent the seller’s successful model or need to modify the acquired practice service model to your way of doing things?
- What is the seller’s commitment in helping with T&R?
Is the seller staying on for 3 months or 3 years? What level of effort and time will they be committing to help you not just transition but help retain through their agreement terms?
- Is there a significant age difference between you and the seller and their clients?
In most acquisition scenarios, the buyer is younger than the seller. But are you significantly younger to cause the clients to initially pause? If the seller is in their 60’s but you are in your 30’s then reassuring clients about your competency, sharing accreditations and certifications, and an investment philosophy in line with the seller are variables to prepare for. Making a strong first impression will especially be important in this scenario.
- What are the differences between client service models?
Is your current service model the same or more white gloves than the seller implemented? Clients don’t want to take a step back in service when a new advisor is replacing their current advisor. What are the variables to consider to ensure the client experience will meet and exceed a client’s expectations?
- Will there be clients who will have to switch products, managers or carriers?
For external, or acquisitions outside your broker dealer of custodian, there may be products, SMAs or insurance carriers that clients have been in that would need to be moved to a comparable solution that your firm’s platform allows for. Prepare to answer detailed questions. Most clients are typically okay with it, but others will be resistant to change and will want to hear a well thought out case of the benefits to them.
By approaching each aspect of the client acquisition transition and retention process with these types of qualifying questions will help in quantifying the specific variables needed to develop and implement a successful plan.
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