These days, many Baby Boom advisors are still interested in selling their practices, but with shrunken assets under management and depressed practice values–not to mention buyers negotiating as hard as any time since the dot.com crash–it’s not as easy as it used to be to strike an acceptable deal.
That’s why I decided to write about another practice case study this month, to tell Dave Shore’s story. Although he wasn’t even looking for an exit strategy, Dave literally stumbled on a unique formula that I wouldn’t even have thought would work. It’s certainly not for everyone, but it’s been so successful that I now believe that his Marin Financial Advisors, LLC in Larkspur, California, represents a model that many solo practitioners should at least consider.
The Value of Networking
Shore’s story ironically starts with Tim Harrington, who by 2002 had been in the field of global investment banking at Barclays Capital for 17 years. Tim came to realize that corporate investment banking wasn’t his dream career, so armed with his CFP, he took what I would call the standard advice and became more involved in his local San Francisco chapter of the FPA to network and find the right situation for his new career. The way things turned out, he could be the poster boy for FPA networking.
Through his local FPA chapter, Harrington met many other advisors and eventually stumbled upon Dave Shore, a career financial advisor who had been running his own small planning firm for 10-plus years. About 10 years older than Harrington, solo practitioner Shore was experienced, established, personable, and successful.
Unfortunately, Shore was also not interested in taking on a junior advisor or a partner. In fact, he was quite happy with his $25 million AUM practice which afforded him the time to pursue outdoor interests like mountain biking, rafting, and windsurfing. As with many advisors, Shore’s primary motivation (his Personal Definition of Success, as Mark Tibergien has been known to call it) was the lifestyle his practice afforded him: he was his own boss, was able to set his own schedule, was devoted to his clients, and generated enough cash flow to fund both his current lifestyle and his anticipated retirement. Shore was understandably happy with the state of his practice and saw little reason to change it.
For his part, Tim Harrington felt that due to the cost of building his own firm and going at it alone in the stringent compliance environment for RIAs, he would be better off joining an existing firm rather than starting his own from scratch. This is a common trait among both young advisors and career changers like him. It’s in sharp contrast to the older generation of advisors–like Dave Shore–who were far more entrepreneurial and therefore far more likely to start their own firms. This contrast is one of the primary factors in Shore’s and Harrington’s eventual success, and one of the reasons that he felt that Marin Advisors was the right fit for him. Now all he had to do was to get Dave Shore to see it, too.