How you can sell your book for the highest price as a senior discretionary advisor

What’s if I told you I can get you 8-12 times your annual revenue for your discretionary based book, how would that sound? Too good to be true?

Well, that’s exactly what we’re doing at Creative Wealth Smarts, for books with an average individual client size of 1MM or greater.

Still, sounds too good? Let me give you some outline.

It's a known fact that many businesses in this industry have evolved from transaction-based to relationship-based. Several decades ago, advisors were referred to as brokers or stockbrokers. Inherent in that name is the idea that commissions and profits were earned based on transactions in the stock markets. The constant movement of cash and stocks, buying and selling, etc. 

Today, that business is all but extinct. For that individuals don’t call on us Investment Advisers and Portfolio Managers, for that they have their discount brokers. And most of the time they are able to transact those trades all by themselves.

Yet our business is still valuable to so many, and in fact, the value we bring to the table is irreplaceable. 

The clarity we provide is essential in these times. Perhaps this is something that will put robo-advisors on hold for some time.

With chaos abound, fear, uncertainty, and the constant digital news cycle amplifying investor biases, we bring clarity. 

This clarity and peace of mind are only possible through the trusting relationships built over time.

That trust is so essential and so valuable.   

This is how you, senior discretionary advisor, can receive so much more for your book.

What's critical to remember here is, what are you selling? What is the asset here? The real value of your business is the intangible assets of TRUST, GOODWILL, and RELATIONSHIP which has been built over many years. Yes, there are the AUM and recurring revenue streams that enable a business to be evaluated. These hard assets are the bricks of the building. However, the trust and relationship are the cement and mortar that holds the bricks together without which the building is worth nothing. In this industry the soft assets are extremely critical to the degree you can't sell one without the other.

Just like the trust and relationship you've built with your clients took you many years and didn't happen overnight, likewise the transfer of this trust doesn't happen overnight. Therefore, we need to look at your retirement from a new set of lenses. Just as the business is no longer transactional, retirement and selling of a book can no longer be transactional.

No matter how good the new advisor is, it will take time to transfer the 'cement of your building', in addition to the 'bricks'.

My belief is that the retiring advisor should be compensated better for assisting in the transfer of the relationship and trust since this surely requires more time on his/her behalf. So if in the past, under a transactional sale, such books were sold for 2 to 2.5 times revenue, it should now go for maybe 3.5 to 4 times revenue depending on how long the projected transfer of trust will take.

Under the right circumstances, I am able to get even more for the retiring advisor. In fact, currently in the area of 8 to 12 times revenue. For this, there is a unique structure put in place.

If you’re a senior discretionary advisor, with 1-7 years to retirement, book a call to learn more.

Send me an email at [email protected].