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How to Find a Financial Advisor Practice for Sale

Updated on
Edited by Arturo Conde, CEPF®
Fact Checked by Jeff White, CEPF®
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Whether you’re ready to set out on your own or you’re looking to grow your business, buying a financial advisor practice can be a great way to help you reach your goals. However, it may be difficult to find a book of business that you’re happy with and that you can afford. There are a variety of ways to go about finding the right firm that you want to purchase. Let’s take a look at the most important things for you to know.

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What to Look for When Buying a Financial Advisor Book of Business

Buying an existing financial advisor practice can be exciting and daunting, no matter if you already own a firm or are branching out for the first time. With an immediate stream of revenue due to the existing client base, it’s a tempting venture, but there are a lot of things to navigate that can be difficult if you’re not experienced. Chief amongst those are finding the right practice and making sure you don’t overpay for it. That’s far from all, though.

Here are eight common things that you’ll want to pay close attention to when you try to buy a firm:

  • Current client base and retention: Evaluate the firm’s client base and the retention rate. A stable and diverse client portfolio can be a positive indicator of the firm’s reputation and ability to retain clients, making it a good potential purchase.
  • Financial performance: Review the financial statements of the firm to assess its overall financial health. Look for consistent revenue growth, profitability and a well-managed expense structure.
  • Regulatory compliance: Ensure that the firm complies with all relevant financial regulations and licensing requirements. A history of regulatory compliance is crucial to avoiding legal issues in the future. You don’t want to deal with ongoing compliance issues that the old firm’s owner created.
  • Employee expertise and stability: If you’re going to be keeping current employees then you’ll want to assess the expertise and stability of the firm’s employees, including financial advisors and support staff. You want to make sure you know what you can about who you’ll be working with.
  • Technology and infrastructure: Examine the firm’s technology infrastructure, including software, systems and cybersecurity measures. A modern and secure technology setup is essential for efficient operations and safeguarding sensitive financial information. Plus, if you have an existing firm you’ll want to know how this aligns with your current structure.
  • Reputation and brand image: Investigate the firm’s reputation and brand image in the industry. A positive reputation can contribute to client trust and retention but a bad one could hurt future growth potential.
  • Complementary services: Consider how the firm’s services complement your existing business or investment strategy. Look for synergies that can create value for both the acquiring and acquired entities.
  • Legal and contractual obligations: Carefully review all legal and contractual obligations of the firm, including any client agreements, vendor contracts and lease agreements. Identify any potential liabilities that may arise post-acquisition so you aren’t caught off guard and so that you can adjust the purchase price accordingly.

There are plenty of other things to dive into when you’re buying a firm but these items will give you a very good starting place to determine whether it’s the right choice for you or not.

Places to Look to Buy an FA Practice

Financial advisors reviewing a book of business for sale.

Buying a financial advisor (FA) practice is a strategic move that can help bolster your career and business prospects. This venture involves several steps, including identifying potential sales, conducting due diligence, negotiating terms and finalizing the transaction. Here are some of the best places you can find a book of business for sale.

1. Listing Services

Listing services like FP Transitions or RIA Match serve as digital matchmakers, connecting buyers and sellers of financial practices. They offer a wide range of options and the convenience of searching for potential purchases from the comfort of your office or home. You might be able to find a nice volume looking for firms this way, but a strong purchase might be a bit like finding a needle in a haystack. It’s a good place to keep an eye on, but often times the best deals will be found elsewhere.

2. Talk to Your Broker-Dealer

Broker-dealers often hold a treasure trove of information about advisors looking to sell their practices, as they are closely involved in the transactions and business activities of these advisors. Therefore, engaging in a well-planned dialogue with your broker-dealer about potential sales can be a valuable strategy.

Developing and maintaining a strong relationship with your broker-dealer is crucial for this to work. When approaching them about potential sales, clearly communicate your intentions and demonstrate your ability to successfully take over a practice. This straightforward communication, much like a well-rehearsed script, can help you gain valuable insights and possibly lead to opportunities that you might otherwise miss.

3. Ask Your Network

Networking can be a powerful tool in unearthing financial advisor practices for sale. The majority of professional jobs are landed via networking, so why not land a business the same way? Effective networking within the financial advisory industry may involve joining professional organizations, attending industry events and leveraging social media platforms like LinkedIn. These avenues can help you connect with potential sellers and gain insights into available opportunities, similar to a well-crafted map guiding you to hidden treasures.

4. Attend Advisor Events

Attending advisor events, such as industry conferences or seminars, can serve as a fertile ground for opportunities to connect with potential sellers. These events also offer insights into industry trends and an opportunity to learn from seasoned professionals, much like a masterclass in the industry. To extract maximum value from these events, prepare a brief introduction or “elevator pitch”, take the initiative in conversations and follow up with contacts after the event.

5. Cold Call or Market Directly to Advisors

Direct marketing, involving reaching out to advisors through cold calling or email campaigns, can be an effective strategy. It allows you to communicate your interests and qualifications directly to potential sellers. However, it requires a personalized approach, persistence and a finely tuned-strategy.

The importance of personalizing your approach to each advisor and demonstrating genuine interest in their practice cannot be overstated in the financial advisory industry. Persisting despite initial rejections, much like a tenacious marathon runner, can lead to successful direct marketing endeavors. This approach can open doors to potential sellers who may not have listed their practices on common platforms, providing additional purchase opportunities.

Are You Ready to Buy a Book of Business?

Are you contemplating buying a book of business but unsure if you’re ready for such a significant investment? Buying a book of business is indeed a substantial financial commitment that requires careful consideration and preparation. When you’re considering buying a book of business, there are key factors that you need to take into account, such as:

1. Financial capacity

Can you afford the initial investment, which could range from hundreds of thousands to millions of dollars (depending on the size and quality of the book)? It’s essential to ensure that you have the necessary funds to support this investment without jeopardizing your, or your current firm’s financial stability.

2. Management capacity

Are you prepared for the expanded operations and client base? The acquired book of business will require strategic planning, coordination and supervision to maintain client satisfaction and ensure the business’s smooth operation. If you don’t have the bandwidth then putting money toward this type of endeavor could be damaging to the firm you’re buying and your existing client base.

3. Time

It can take a lot of time to go through an acquisition process and it can take even more time to bring a new firm full of clients on board. It’s important to know what you’re getting yourself into beforehand. You need to make sure you’re up to the task, and you have th resources needed to make it a success.

Bottom Line

Financial advisors discuss a book of business to buy a financial firm.

The process of acquiring a financial advisor practice or a book of business is a significant, multifaceted venture. It offers potential profitability from an established client base, but it also comes with considerable challenges and responsibilities. Prospective buyers must grasp critical factors such as financials, the size and quality of a book of business, client retention rates and the valuation methods used. Furthermore, a buyer needs to exercise due diligence, secure financing and plan for a smooth transition. Finding the right one, when you’re ready, can be a huge financial boon to your business.

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