Acquiring a Financial Advisory Practice: 5 Ways to Promote a New Firm

Acquiring a Financial Advisory Practice
5 Ways to Promote a New Firm

Acquiring a Financial Advisory Practice – 5 Ways to Promote a New Firm: one of the many ways to grow your financial advisory practice is through the acquisition of a firm where the owner is seeking to retire.

As a Financial Advisor Coach since 2004, I’ve created a huge library of Growth Strategies on this very blog. See the search feature in the side bar if you’re looking for something in particular!

Acquiring a financial advisory practice can be one of the best ways to grow your firm. However, in order to make sure that the acquisition goes smoothly, you must announce the acquisition so that your clients, prospective clients, and everyone in your COI circle is aware of the changes.

1.Acquiring a Financial Advisory Practice – When Should Financial Advisors Buy?

Your decision to buy should be based on your own personal timeline and goals. For example, if you would like to grow for a period of 5 years, then buying now gives the seller plenty of time to provide you key documents needed for the acquisition.

In addition to your individual situation, it’s helpful to consider how well prepared your team is for this transition before deciding when it’s time to promote or announce the acquisition. It’s important not only that they’re capable but also that they have some experience working with clients independently prior to onboarding the new firm’s clients.

You are hoping to get a solid return on your investment of time, money, and hard work. Therefore, shoot for an 80% capacity level before considering buying so that when you announce the acquisition of a financial advisory practice, you will get worthwhile results.

2.Acquiring a Financial Advisory Practice – Who to Buy from?

You want to be sure that the company or financial advisor(s) you are buying from is a good fit. An excellent place to start is by asking yourself, “Does this company align with my values?” Does it share my vision? Does it share my personality? Is it compatible with how I like to work or even how I like to live my life outside of work?

If you don’t feel like they’re a good fit, then maybe the deal isn’t worth doing. You don’t want to buy the financial practice because someone is desperate to sell. You want to make sure that whatever decisions you make are in alignment with who you are as a person and what matters most in your life. Once you’ve identified some companies that might be a good fit based on their culture (or lack thereof), take some time talking through what makes them tick before moving forward with negotiations.

The culture makes a significant impact on the sale. You are buying a financial advisor firm and its clients and merging them with your firm, team, and hard-earned book of business. This can be extremely nerve-wracking because for your book of business, you have taken the effort to know each client’s specific quirks and found a way to make them work in your favor. Having this work with the clients from the acquiring firm is essential. Communicating those details can feel like a David and Goliath situation.

Sit down with your seller and really get to know them and their motives. There should be reassurance they are providing the total valuation of their practice, and their clients will be given the benefit of fair treatment and experienced guidance at your firm.

3.Acquiring a Financial Advisory Practice – What is the seller’s business model?

Ask for documentation regarding the firm’s business model and revenue generators. What percentage of revenue come from financial planning fees? How much comes from investment management fees? How much comes from commission products or annuities?

How does their revenue stream align with yours? If there’s a big difference, such as a focus on mostly commission products, plus very little in the way of pre-scheduled Client Review Meetings, then this firm may not be a good fit for you.

4.Acquiring a Financial Advisory Practice – Buying from a Financial Advisor in Your Own Broker Dealer Network

It should not be surprising to find advisors who have worked in your broker dealer network being interested in purchasing your practice. After being familiar with who they are, it only makes sense to approach them directly and see if they would be interested in or refer you to someone else at the firm who might be interested in selling their book or practice. 

If this is the route you choose, make sure that they’re aware of any contracts or agreements with other broker dealers, and make sure everyone signs confidentiality agreements before showing them any critical information about your firm.

Your current broker dealer might also be able to provide advice on how best to sell this way because there are certain legal requirements that must be followed before doing so.

5.New Financial Advisor Name or Keep the Current One?

The name of the firm after the acquisition plays a vital role in the future of operations. Some buyers prefer their names be removed as part of the deal, while others welcome combinations or new branding. The point is some clients will reach out to a company because of the name attached to the advisory.

It is NEVER my recommendation to use an owner’s name in the new firm name! Using the owners name limits your ability to sell the practice in the future. See this article about How to name your financial planning or wealth management firm.

It is only natural to consider what kind of firm you want to create with the acquisition of the new firm. If the name does go through a change, perhaps a branding exercise would be the best way forward. Take a look at Branding Your Practice.

6.Mergers and Acquisitions of Financial Advisory Firms

Mergers and acquisitions (M&A) are the most common way for advisors to acquire or sell their practice. If you are considering acquiring a financial advisory business, it is critical to understand how these transactions work in order to maximize your return on equity.

The first step in finding an M&A buyer is understanding where they may be located. Most sellers will be interested in a geographically close firm or one that is complementary to their existing location. This can help ensure that the new acquisition doesn’t overlap with existing services covered by other offices within a given market area.

One thing to note is that location no longer matters. In the post-covid world, working with clients virtually using Zoom and other technologies has become the norm with clients under 60 years of age.

How to Announce and Promote Your Financial Advisor Acquisition:

1 – Letters

You will be sending out three versions of letters throughout the transition phase of buying and acquiring your new financial advisory business.

The first will be a general announcement to employees, stakeholders, and clients. The goal is to slowly introduce the future change. The second will be a reminder leading up to the actual change. This is kind of like a “save the date” notice to ensure people understand what is about to happen.

The final letter is a welcome aboard letter that is often combined with a farewell notice from you and any other team leaders. It is the official “passing of the guard” and a way to show your support and faith in the new direction of the practice.

2 – Emails

This communication will mirror the letters in the three-phase plan. However, the first two will be different. Instead of using the first email as the announcement, make that the second. Your first email should be a subtle hint that change is in the air for your practice. This is a powerful tool to “test the waters” of your book of business and see what clients will stay or jump ship.

The final email will be the same as the letters, a proper farewell and welcome aboard to the new team.

3 – Phone Calls

You should make two phone calls to critical members of the team and clientele. The first is the announcement that a transition has begun and outline some of the phases with reassurance that their accounts will be treated with the same emphasis and respect as they have in the past.

The second is a firm farewell and welcome to the new team. It is the final stage and touch point you will have with these clients as you hand them off to new leadership.

4 – Meetings with Clients

These will be the most important part of your transition. Clients will want to be reassured of their financial well-being. Going through the transition plan and how it will affect their business is critical to maintaining their patronage.

These meeting should have both the buyer and the seller. Again, make sure confidentially agreements have been signed and possibly non-competes. Bring in the new buyers into the firm about 6 months prior to the actual date of transition. This way, they will be exposed to the unique needs, wants, and challenges of each client before being in charge of their financial futures.

5 – Social Media Campaign

Social media is a powerful tool for so many reasons. This will be more of an exercise in branding, but it is just as important as meeting with individual clients. You are announcing to the general public that your practice will be changing hands. As you have most likely been highly involved in your local community, reassuring them that they should expect the same deference in the future will ensure a smoother transition.

You also want to help maintain the value of your business by keeping the flow of new clients going as you move forward with a sale. Dedicate an entire month to a well-thought-out social media campaign. Here you can announce your transition through a series of posts.

Try to integrate attractive imagery through Canva tools. For example, you may wish to make 8 posts to spread out the month before the change. Each one will serve as a way to communicate the new buyers, the services being provided, the types of clients you work with, and any new initiatives the community can expect.  

Final thoughts on Announcing your Acquisition

The truth is that there isn’t a one-size-fits-all approach to announcing an acquisition. Every unique situation brings its own challenges. Keep patient and do your best to communicate clearly with your clients and the overall community to ease any fears or apprehensions at the change.

Clients have trusted you with their financial futures for years. Now you must pass that torch onto equally qualified advisors willing to put in the same time and effort as you to grow the practice. 

Hopefully, this article gives you an excellent starting point to announce the acquisition of the new practice. In the end, the more straightforward and smooth you can make this transition, the easier it will be to move on and pursue your business goals.

About Suzanne Muusers