Optimize Your Sales Advisory Process for Purchasing

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hey what's going on it's Patrick here from Brewer Consulting topic for today is should you acquire an advisory business this is something that I went back and forth on for a number of years and when I was 28 I actually ended up purchasing a book of business up in Sacramento California it didn't end up working out super well for me and I can't really get into the details on it but what I feel like advisers need to know about acquiring another book of business is first the financial side of it right so let's say you are considering acquiring a book in business and one of the clients inside of that book has a million dollars in assets and you and the seller have gone back and forth and you discussed what you believe to be a fair price for the for the for the clients at about 3x revenue multiple you know two to three X's generally what's kind of the average for fee only or even a fee based practice depending on kind of the the structure of the book so you agree to that 3x multiple and now the value of that million dollar account and let's say it's a 60 year old husband and wife is $30,000 so that's a pretty significant price to pay for a 60 year old client with a million dollars in assets 30 grand so what in your mind what you should be thinking if you're if you're in the market to acquiring a diary advisory businesses is can you acquire a 60 year old account or regardless of age an account that has a million dollars for less than $30,000 yes you absolutely can using a marketing strategy that actually converts so my thought with acquiring advisory businesses the only reason you should do it is if you can't put a marketing or sales strategy in place where you can actually get business on your own and you need to buy the trust from someone else and then the challenge is if you've committed to continuing to buy advisory practices and you've got other partners and advisers that are part of your firm what value are you really providing to them honestly because what what advisors are looking for from a leader from the person who's driving the strategy of the firm is the ability to get them in front of more people strategically from a sales and marketing perspective so that they can make more money and they can build more equity for themselves so what you're doing fundamentally by buying other practices is you admitting to yourself into your staff into everyone else that you don't have a system in place to be able to consistently generate new business so you need to buy the trust and the resources from somebody else and now there's tons of other challenges that go along with this it requires a very specific alingment and personalities to make sure that this transaction actually gets to the point where it's fruitful for both parties so there's tons of risk along the way but just that sheer number of paying thirty thousand dollars for a million-dollar account when you could easily get a you know million dollar account for 800 to 1200 dollars using a series of online marketing strategies or even direct response marketing using direct mail and things like that worst case scenario I just find it pretty crazy and then on top of that with my firm we've actually modeled out over 32 million in inheritance transfers over the next 10 to 15 years and that's going to come from somewhere that's gonna come from the investment that you're most likely making and acquiring these books of business that in my opinion are gonna be worthless in 10 to 15 years so you need to be really careful when you decide to write that check whether it's bank finance whether it's seller finance if it's seller finance it's a little bit lower of a risk but you're still pulling your time and your energy away from you and your staff and and not creating what you ultimately need to create which is a consistent strategy to get in front of people so that you can bring in new prospects and convert into clients and then make a fantastic client experience on the back end so that you can increase your organic growth rate so if you're spending a lot of time and energy looking for sellers you know you're you're doing those those things and you're trying to buy practices I think that your energy could be spent in a in a better way by building a consistent approach to getting people in the door converting them effectively at a low cost and then creating a client experience that's going to convert so I'd love to hear your feedback in your comments in in this on this video I just feel like there's a lot of advisors that think that's a solution is to just buy up books a business and it's it's really a band-aid it's a band-aid because there at some point all those books are gonna be acquired and all of those clients are eventually going to transfer to advisors like me and the people that I trained who are build a systematized process for getting clients that are a little bit younger and keeping them as raving fans of our firm so I'd encourage you to think about that before you pull the trigger on buying and advisory firm all right guys have a good weekend