The greatest prospecting opportunity in the history of this industry is right now.
No, it’s not cold calling, networking, referrals, introductions, seminars, direct mail or the “85 percent of high net worth investors who would consider changing advisors.”
It’s the legions of baby boomer brokers who, like their counterparts in society at large, are inevitably, if reluctantly, lumbering toward retirement. If you are 35 to 50 or so, you should seriously think about a partnership with a senior advisor, with the long-term objective of buying him or her out. I call this a buyout partnership.
The average age of a financial advisor today is about 58. In the next decade, billions if not trillions in assets will go in play as senior advisors retire or pass away. Younger advisors, now in the industry, have the most golden opportunity of any group, probably since the early baby boomers hit the markets in 1983, 1984, 1985.
Talk with several prospective partners. Please understand: you young advisors are in high demand. There are more of them than there are of you. Pick the best opportunity.
That’s not necessarily with the oldest and richest. Personality conflicts could intervene. The oldest and richest might have clients who will pass away even before the FA retires.
The best opportunity is with someone you like and trust. He or she has at least $50 million in AUM, and is willing to completely share knowledge and skill. Ideally, it is someone whose book contains a substantial percentage of people younger than the FA.
To find out if a particular partnership will work, go through the steps of my “Partnership Process,” found in my white paper and tools online.
Find a Suitable Partner
For the senior, this means find someone at least 15, preferably 20, years younger. For the junior, vice versa. This can be as simple as letting your complex manager know you are looking. You can, and probably should, join a local group, such as an FPA chapter. An even more radical approach, search Google and look at pictures of FAs.
Get To Know Each Other
The basis for a surviving partnership is enduring friendship and goodwill, and common ground on investment strategy. Perhaps like most surviving marriages, a long courtship is worthwhile.
Obviously, you need to agree on investment philosophy. A partnership MUST speak with one voice. At the time the relationship comes together, that voice is the senior partner’s. In most partnerships, the partners need a similar work ethic. However, in a buyout partnership, the agreement can be for the senior partner to work less and the junior partner more. It’s sort of a “your brawn, my brains” deal.
Get an Agreement
Here are key tasks you must perform to arrive at an agreement:
Gather data. Each prospective partner should be willing to share some data about clients. These data do not have to disclose client names, but they should include assets, revenue, dates of birth and known health issues. My website will help you calculcate average ages and life expectancy for clients and spouses.
Consider: Suppose the average age of a clientele is: husband 76 and wife 72. Very roughly, in 10 years, in some 20 percent of cases both spouses will have passed away. Unless you have drilled deep into the family relationship, a fifth or more of assets will have gone to the heirs to be spent or managed elsewhere.