At Centurion, we speak to financial planners every day about all manner of problems they are facing; whether to buy a client book, sell a client book, merge with another planner or business, or enter into an internal succession plan. Whatever the question, it all comes back to one principle:
Know, Like and Trust
It is relevant to each and every conversation we have.
You won’t buy a book from someone you don’t know, like, and trust.
If you don’t believe in the ethos of the planner, the products their clients are in, the advice model or their relationship style, you will look for reasons for the deal not to proceed.
Client metrics are one thing. For instance, average fee and spread of products can often be adapted over time. We have spoken to multiple firms that have run fee uplift projects and been successful in lifting revenues by upwards of 50%. But it all comes back to Know, Like and Trust – if you don’t come to know them, get to like them and grow to trust them – you won’t sign an agreement with them, you won’t pay them money, and you won’t take over the servicing rights of the clients.
You won’t sell a book to someone you don’t know, like and trust.
Let’s face it, your client base is often your life’s work. You have seen your clients develop and go through stages. In a lot of cases you’ve met their families, chatted about life events, said hello to them in the street or at events, or even played golf with them. The relationships you’ve built with your clients over time mean you are not going to walk away and leave them with a planner who you don’t have a chance to get to know, like and trust – no matter the price offered.
A prospective planner whose ethos about advice contradicts or clashes with yours means that your clients may not stick, impacting claw backs. Each time we take a client base to the market, we ask the vendor if there is anyone, or any practice, they would not sell to. The usual answer here lies around the advice process (independence) perceived or otherwise, and client care. You want to see your client in two years’ time and hear positive comments, not be ashamed of who you sold to, or feel like you let them down.
You won’t merge with another planner or business if you don’t know, like and trust them.
By now, you’ll have well and truly identified the theme here. Merging your business is almost a combination of buying and selling, a marriage of two planners or firms. A cultural fit is more important here than in either of the two stages above, as you will be working with the planner into the future. Whether it is a cost sharing arrangement (sharing space, admin support and expertise) or a full merger where you work together, sharing clients and running your businesses together, you will not risk your reputation, your clients’ respect or your businesses future unless you know, like and trust the person with whom you’re merging.
If you stand back and say ‘they run a good business, but I’m a bit iffy on X’, you won’t merge. You won’t feel comfortable with it. And nor should you merge with a planner or business if you have doubts.
You won’t enter into a succession plan with someone you don’t know, like and trust.
Lastly, bringing an internal successor into your business by ‘promoting’ a team member will not occur unless you know, like and trust that person. We hear of business owners who have successors they go for bike rides with on the weekend, or successors’ families they have met and host annual family events with. We’re not suggesting you have to be this close, but you do need to know, like and trust them. You won’t be comfortable bringing them in otherwise.
We’re not saying it’s all as straightforward as that; there are a lot of other factors that go into buying, selling, merging, or internal succession. However, as a basic principle Know, Like and Trust, are three key requirements.
Having an independent adviser throughout these processes means you can have someone to sort through the tough issues when needed (and play ‘Bad Cop’ if/as required) and leave you to build a solid relationship with the other party. There’s nothing worse than being in negotiations with one party and having them want to pay a reduced price because they know, like and trust you (and have you cornered because there’s no competition)!
If you have any queries or want to talk through your future plans, get in touch with us. We can set up a competitive sales process with parties we know and can screen for a good cultural fit for you. Call us for a free fifteen-minute session.
