There are a number of steps for advisers in selling a parcel of clients and ultimately realising the best price from a buyer
A key part of my journey in No More Practice involves selling a parcel of clients so I can consolidate operations, focus on key clients and ultimately improve the value of my business.
The first step in selling a parcel of clients is having a clear understanding of client segmentation and being able to provide the right service to the right clients at the right time. The clients that are paying you more obviously deserve better service because they’re contributing more to your business and profitability.
We hear a lot about the 80/20 rule when it comes to clients and revenues. However, I don’t believe in this principle because if 20 per cent of your clients are providing you with 80 per cent of your revenue, then you should be getting rid of 80 per cent of your client base and focusing on that 20 per cent.
So if you have a segment of clients that do not fit your value proposition, one option is to sell that book of clients. If you are part of a large dealer group, they should be your first port of call when it comes to selling a parcel of clients. After advising them that you are looking to sell a parcel of clients, they will have a network of other practices that could come forward and take that book off your hands, particularly if those clients are on a similar platform, which makes the process much easier for those buyers.
However, if you are not part of a large dealer group, I would strongly encourage advisers to use a broker that specialises in financial planning. Such brokers will have a database of existing businesses looking to buy practices or books of clients.
In either case, if you want to get the best price for that parcel, buyers want continuity. They want to make sure that there’s a service offering in place in relation to those clients. They want to make sure that the clients are engaged, profitable and understand the transition process as well. So generally, they’d want the key advisers as part of the deal. They want to maintain that relationship because that’s what they’re buying – they’re buying a relationship and it can be a really tricky thing to sell.
You can’t just sell a relationship. I still get clients who have been sold in previous deals who are ringing me and saying: “Hey Sam, we signed up with you, not with the people that you’ve sold to?” That remains your challenge because clients sometimes want the adviser that they signed up with, not necessarily someone who you might sell them off to. If you love being engaged with clients as I do, then selling a relationship is probably the toughest thing you might go through in this process.
