NOTE: I would like to thank guest blogger Kevin Condon for this insightful blog. While he writes to owners of financial planning practices, his wisdom is equally applicable to any business owner considering buying or selling a business. – JH
Recently Jon Hokama invited me to present at a session on Buying and Selling of mature financial planning practices before the FPA of Colorado Denver (I served as a resource on both the buying and the selling sides, since I had grown my practice through both acquisition and my own client development.
Before, during and after that meeting, I have had several conversations about the problems posed to both buyers and sellers. There are many. However, my strongest observation is that most people look at their “sale” or purchase as a financial opportunity only.
This is a mistake…
The amount of cash we walk away with is important, of course. However, we can’t forget to FIRST anticipate the needs and the experience of the clients whose happiness is the real asset under transition. When we focus on the happiness and monetary success and security of the principals, we are in danger of a failed transaction.
When the smoke clears on a successfully transferred practice, the happiness and security of clients’ needs to be first in our minds.
The only acceptable outcome of a lifetime of ethical practice spent satisfying clients is an ethical transition that continues the same level of care and responsible behavior that earned us the role of trusted advisor in the first place.
How can we do that?
I’m afraid it isn’t simple because nearly every successful financial planning practice is unique, filled with trusting relationships that were carefully built to deliver the services and level of care that kept the business strong. Here are a few issues that sellers need to attend to and buyers better be comfortable with.
- What is the proper transition formula for maximizing client comfort and security? Not in general but for the specific practice in question? Careful planning and execution will maximize the value of the practice both on sale and purchase. Don’t allow anything to replace this perspective. It is professionally and ethically irresponsible to do so.
- We begin with the culture of the practice in situ. Change the tone and personality of the firm slowly. You can transition the ownership of an old boys’ club of former “fraternity brothers” to a dynamic young technical female financial manager, but you’d better be careful how you do it. Take the time necessary to blend the personalities and services of the old and new owners into a culture that seems improved by clients. A slowly transitioning owner can manage clients’ expectations more easily if it is not one uncomfortable, scary big jump for the firm’s clients.
- Increase the service communication and don’t go dark due to the work of change. When I left my firm, each client had 16 “touches” per year from the firm. If things appear to clients to be healthy and stable, the fear and insecurity that might cause “comparative shopping” and loss of clients will be minimized.
- Take care of the next generation’s needs. Include client’s children in all ways in the transition. If the heirs are not happy, they will bring your competitors to their parents to “help.” Clients’ children should be reassured that the “new” is also improved, not just for their parents but for their inclusion as stake holders in the future of family wealth transfer.
Next week, I will continue examining the care required to achieve successful transition of a mature practice without losing value. I will focus on how to strengthen the brand of the firm to ease transition and enhance value.
About Kevin Condon 
A veteran of the financial planning profession since 1984, Kevin Condon built and sold a successful AUM/tax/planning practice in Maryland to his partners in 2002. Then, he built a “bleeding-edge” national online registered investment advisory firm by developing the technology, services, and advice products required by large employers and online advice consumers.
A PhD and retired Certified Financial Planning practitioner, Kevin is an Associate of JH&A who currently does online employee benefits financial education sessions through Financial Knowledge Network and volunteers in Colorado state prisons thorough Kairos (https://kairoscolorado.org/) for fun.
