We have a serious problem. There are not enough financial advisors being trained and coming through normal channels to replace all those advisors who want to retire and sell their practices. If you are a buyer, well things are about to get really good. There will be a lot, again, a lot of practices up for sale.

I have coached clients who are selling and purchasing practices and when it gets close to the “end” for the outgoing advisor, that aging advisor has a serious crisis of identity and does not want to leave. The following are ten things you can do to make the transition smooth for the buyer and the seller.

  1. Seller, start looking in your area for younger advisors and start interviewing them, today. You will never find someone that is going to do things exactly the way you do, but you can get close. This interview process should take a few months at least. You want to test their true colors and ask them the tough questions. Give them situations they need to solve and see how their brain works. Also ask to interview their staff.
  2. Seller, hire a practice broker. If you are not able to find a person in your area that will work for you, hire a professional. They are out there, yes, they take a piece, but it is well worth the delegation. You will not get what you think the practice is worth to you. I am sorry, but we as business owners have unrealistic expectations on what our businesses are worth. 
  3. Seller, DO NOT SELL TO AN INTERNAL PERSON IF THEY CANNOT CLOSE BUSINESS. This is one of the biggest issues I see as a coach. You want to reward your staff or your junior advisor for their years of hard work, but if they cannot make rain, your practice will die after you leave.
  4. Seller, hire a transition coach. There are not a lot of us out there, but those of us who do this type of work can help you transition to a fulfilling lifestyle that will give your third chapter meaning and maybe even some extra means to pad your pocket.
  5. Buyer, pay a fair price; you will recoup your investment in 3 years. This is an investment in your growth and development of your whole career. Do not make the mistake many advisors do, don’t be cheap.
  6. Buyer, meet with all the seller’s clients with the seller over the next 18 months. If you don’t do this, you will lose a lot of the value of the purchased practice.
  7. Buyer, create a story on how working with you is a great option. You need to create a transition story and tell it better than you have ever told any story. Rehearse it with the seller over and over. Practice is going to be vital for this step. You are going to tell the story hundreds of times, every time it has to sound like the first time you have told it.
  8. Buyer, keep the staff you want, give a severance to those you do not need or who do not fit your culture. Do not axe the whole staff, it is not a nice thing to do and also looks like a hostile takeover. It is a business deal and you have to make sure you are maintaining profitability and the right culture, but, the clients of the seller need, yes need, to see some consistency. 
  9. Buyer, incentivize both teams to help with the transition. Bring in lunch weekly, chair massages, dinners if the team is working late. The more clients they help retain in the transition the better off you are for years to come.
  10. Buyer, ask the team, not the seller, who are the clients they would fire. This is a great time to fire some in your book too. You do not need to take on headache clients and it is a great excuse to shed the ones that are headaches for you too. This is going to be a lot of work for everyone involved; there will be a lot of headaches. Identify the clients that are headaches and leave them to another advisor.


Register or login for access to this item and much more

All Financial Planning content is archived after seven days.

Community members receive:
  • All recent and archived articles
  • Conference offers and updates
  • A full menu of enewsletter options
  • Web seminars, white papers, ebooks

Don't have an account? Register for Free Unlimited Access