Selling Your Practice ? After Negotiations Fall Apart

Beverly Flaxington

Beverly Flaxington is a practice management consultant. She answers questions from advisors facing human resource issues.  To submit yours, email us here.

Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.

Dear Bev,

I was hoping to sell my firm to another financial advisor. We had worked together for a while and I thought I knew him well. When the time came to close the deal, he turned into a different person, trying to negotiate for all kinds of things and generally being very nasty. The deal fell apart. I need to sell my business but this experience left a bad taste in my mouth.  I am 62 years old and feel like I am starting at scratch. How do I find a suitable buyer who will treat me with respect and negotiate fairly?

Name withheld

Dear Financial Advisor,

Given the aging of the financial advisors (average age is somewhere between 58 and 62 of currently practicing advisors) succession planning will continue to be at the forefront of concerns. I applaud you for planning so far in advance – few advisors do this. And, I extend my condolences for what happened. I know too many situations with partners or potential mergers where something goes drastically wrong due to the human element.

Don’t panic. Most advisors actually start planning for succession or selling at the stage you are right now.

There are a few things you can do:

Talk to your custodian or broker-dealer. Often they will have other clients who are seeking to buy and might be able to make an introduction or match.

Run a search for other financial advisors in your area. Contact them and introduce yourself. Get acquainted and see if there is opportunity to do joint work together as you had been doing with the previous person, or see if there are firms interested in buying other firms or books of business.

Network. Go to industry meetings and events and talk to everyone. If you don’t find a like-minded advisor or small firm, consider talking with one of the aggregators about purchasing your firm.

Once you locate a person, firm or aggregator – be sure to talk about personality fit, investment philosophy, values and cultural fit. And, as you have learned the hard way, don’t wait until the deal is almost done before you talk terms.

Good luck.

Dear Bev,

Does social media really work for advisors? If we are supposed to focus on the human element and relationships, how can being connected via the Internet help us to grow or run our business? I see a lot about the importance of social media, but I’m skeptical about whether it will make a difference for me. No one ever hired me without meeting me first – face-to-face is critical in this business.

Mike C., Dayton Ohio

Dear Mike,

You are asking about a very hot topic in the financial advisory space today – where and how does social media fit in marketing and communication?

Relationships can take a number of forms. It can mean face-to-face interaction, although one of the most successful advisors I know has grown his business without ever meeting many of his clients, so I can’t say it’s imperative. What is imperative is to know your market and to know how to communicate with and markete to them.

It’s very common for anyone under 40 years of age (and often under 50 or 60) to Google a firm or a person that they hear about.  Younger generations (35 and under) only know how to do research online and they are very practiced at finding information. If someone looks but can’t find you, the interpretation is usually a negative one. Or if they find something that someone else has written, you aren’t in control of the message.

Social media is important because it gives you a presence. The more proactive you are and more time you spend creating your social media presence, the better you will control the messages online. At a minimum, you should be on LinkedIn and should link with your clients and centers-of –influence (COIs). It’s a great way to find who your clients know, and who the COIs are connected to.

Some advisors are successfully blogging and this is a great way to disseminate get ideas and show prospects and clients you are actively trying to find information to help them. If your compliance department won’t let you post your own thoughts on the market for example, find interesting articles and blog about your perspective on what you’ve read. Find non-investment related material such as employment or real-estate trends.

Many advisors have Facebook pages where they post interesting information about events, or articles they’ve found. Advisors who do presentations or are interviewed on radio or television can re-post these to YouTube or to their own website.

There are many ways to engage in social media to establish your presence. It isn’t a replacement for the face-to-face meetings, but rather a complement to it. As the market changes and younger people are making their own money, and inheriting from their parents and grandparents, a shift is coming where more interaction will be done online. You don’t want to wait until the shift happens and try to catch up.  Do what you would be comfortable with at this point, and don’t ignore it entirely.

Beverly Flaxington co-founded The Collaborative, a consulting firm devoted to business building for the financial services industry in 1995; in 2008 she co-founded Advisors Trusted Advisor to offer dedicated practice management resources to advisors, planners and wealth managers.  She is currently an adjunct professor at Suffolk University teaching undergraduate students Leadership & Social Responsibility. Beverly is a Certified Professional Behavioral Analyst (CPBA) and Certified Professional Values Analyst (CPVA).

She has spent over 25 years in the investment industry and has been featured in Selling Power Magazine and quoted in hundreds of media outlets, including the Wall Street Journal,, Investment News and Solutions Magazine for the FPA. She speaks frequently at investment industry conferences and is a speaker for the CFA Institute.

Read more articles by Beverly Flaxington