Buying a book of clients is one common method planning practices employ to potentially boost their client base and funds under management. However, advisers need to make sure they pick the right book of clients to ‘renovate’ to ensure a good fit with their practice as well as the potential to turn a profit.
The traditional book that most businesses want to buy is one that is unloved – one that has historically not been serviced well. The simplest thing you can try and do is make sure they get better service.
But buying the right book of clients to renovate needs careful thought. When you buy a book, first of all you need to know and understand ‘your way’. So, how you work with your clients, what your standards are for servicing clients, how often you see them, what sort of advice you give, how you deliver value and also create value for your practice and how you ultimately make a profit are fundamental to ‘your way’.
Once you understand this, you are in a better position to be able to assess a potential book of clients, conduct due diligence, establish a cost value and likely revenue shift as well as estimate the time and effort in ‘converting’ those clients to your way.
Understanding the demographics of a potential book is an important step in this process. If you do your best work with those in the 45-55-year-old age bracket, you wouldn’t go and buy a book of retirees, for example.
So in buying a book of clients, you need to know how you can renovate that book in order to not only get the renovation benefit of those clients but also reap the renovation profit to your business.
