When there is a competing offer on the table, it can be challenging for a potential buyer to convince an older practice owner that he or she is the best fit. That can be an even higher hurdle for younger advisors when the bidding process includes a veteran advisor with more purchasing power.
Thankfully, younger advisors still can win over sellers without getting into a bidding war. Of course, you will need to differentiate yourself and the value proposition of your practice. But beyond that, the most effective strategy is to build a stronger relationship with the seller than other bidders — ideally a couple years ahead of a seller’s retirement and, therefore, before competing offers start to materialize.
While you can go about this in various ways, I have seen these three approaches get results, either by themselves or together.
Many potential buyers talk a good game about wanting to know all about the seller, their practice and upholding their legacy. But absent the type of introspective questions that suggest that as a buyer you “get it” or at least are trying to, much of this talk is frequently hot air.
Start by asking why the seller first entered the financial advice profession and why they are now looking to exit the business. Then, ask how they overcame their biggest career challenges and what they see as the most complicated hurdles facing their practice’s future owner. Next, ask them to explain their day-to-day interactions with clients, staff and third-party vendors.
Finally, explore their philosophy of investment management, financial planning, and how they create solutions for clients. Some advisors are more investing oriented and do little financial planning, or vice versa. Some advisors prefer set-it-and-forget-it target date funds, while others prefer more proactive strategies. How often do they meet with clients, how does their clientele break down, and so on?
At each stage of the conversation, summarize what the seller has told you and briefly share your own relevant experiences from your career. Doing this shows that you have a genuine interest in what they are saying and have built over the years, deepening the bond you have with them and making it easier for you to make suggestions.