Practice acquisition is one of the most efficient ways financial advisors can grow their businesses. According to Cerulli Associates, a whopping 43% of current financial advisors are at least 55 years old, potentially nearing retirement.

So, if someone were in the market to acquire one of these established financial practices, they could simply cast a line and pull them in, right?

Wrong. The majority of financial advisors are not ready to acquire any of these practices. Two of the possible issues -- poor organizational structure or an inability to finance the deal -- can be addressed and corrected for. More problematically, many advisors simply lack the emotional flexibility it will take to see the deal through to fruition.

Understand: This is the beginning of a relationship, so the process should more closely resemble a courtship begun on eHarmony than a purchase made via Craigslist. Getting to an end number that both buyer and seller can agree upon is one of the easiest things to accomplish. The hard part is getting beyond personality differences and the egos on both sides of the deal.

I've watched many practice acquisitions over the years -- some among business partners, others among family members, but most among advisors unknown to each other. It's become clear to me that building a rapport is critical. Acquisitions frequently fall apart because a buyer never took the time to get to know the seller's underlying motivations and desires.


Let's say you are an advisor with $60 million in client assets among 250 households, and a staff of two; you take home about $400,000 a year after all expenses. Feeling that you are ready to grow by acquiring a practice, you find a prospective seller who is about 20 years your senior and manages about a third of the assets and revenue as you.

Do you approach this individual with a number in mind and contract in hand? Remember: Even if this is simply a financial transaction to you, you are buying this seller's pride of ownership. This is where that emotional flexibility must kick in -- empathy here is critical, and you must be able to check your own ego at the door.

Perhaps it would help to think about this another way -- how would you handle a prospective client that walked into your office with $20 million in assets for you to manage? Would you immediately get your attorney involved and task them with the responsibility to communicate with this person on your behalf?

Probably not. You would likely put them squarely at the top of your call rotation, be sure that your staff knows who they are, and treat them with the utmost respect at all times.

This is the exact mindset necessary to facilitate a successful relationship with a prospective seller. Even if the practice is smaller than your own, that doesn't mean that its current owner holds it in less regard than you do yours.

Use your relationship skills to understand the emotions and motivations behind the potential sales, just like you would with a retail client, and you will unlock the key to a successful acquisition.


Most advisors are interested in paying as little as possible for a fee-based practice with a concentrated, high-net-worth client base. Unfortunately, this just isn't realistic. Those practices command extremely high multiples on various listing services.

Instead, assume you'll pay a reasonable price for a practice from which you can unlock value -- but be prepared to invest some time in building a relationship first.

You'll probably need to commit a significant amount of time catering to the seller's emotions and motivations. But realize that this time pales in comparison to the time you'd need to acquire the same number of clients through traditional marketing methods.

Understand that you are acquiring a business built over decades in our industry, and that the clients may be some of the seller's closest friends and family. It is important for a seller to know that these clients will be taken care of and not simply treated as a commodity. The way you treat the seller during the acquisition process is going to send an important signal.

Remember, this is more like eHarmony than Craigslist. Ego and pride are involved and emotional flexibility is essential. The sooner you can approach this transaction from the same side of the desk as your prospective seller, the better this relationship will be for everyone.

Jason Card is vice president of advisor solutions for J.W. Cole Financial.

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