Aug 26, 2021
Many advisors aspire to be an investment manager rather than a financial advisor -- and this can undermine the value and salability of the business. There are very few ways to stop devaluing your business, learn them here.
- If performance is down, your client has just one solution -- fire you.
- No one wants to buy your job, they want to buy your business.
- You lose economies of scale and ability to duplicate or leverage yourself.
InvestmentNews: Stop Devaluing Your Business
- Scott Hanson
"If most professional money managers can’t outperform the indexes,
neither can advisers and financial planners. And aside the question
of whether this sort of active management provides any real value
to a client, even if it is accretive and delivers alpha, it
absolutely reduces the value of the firm.
You see, if the recurring revenues generated by his
practice were based upon transferrable, repeatable financial
planning and elite customer service disciplines, one could easily
build a case that this sort of client deliverable could be handled
by another financial adviser or acquiring firm.
The problem is that in the clients’ eyes, it becomes he alone, along with his ability to outsmart the markets, that comprises the value of his firm.
Any acquiring firm will look at his practice as high risk in the areas of potential portfolio losses and client attrition, and subsequently reduce the price it is willing to pay."
Possible Solutions:
- Stop digging the hole. Convert to a collection of 3rd party asset managers.
- Rebuild with the right tools. Craft actual models and execute with asset manager trade technology.
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The RARE Advisor is a business model supercharged by Recurring And Repeatable Events. With more than thirty years of working with and coaching successful advisors, host Mike Walters (along with other leaders in the industry), discuss what it takes to grow a successful practice. With the aim of helping financial professionals and financial advisors take their business to the next level, Mike Walters shares insights and success stories that make a real impact. Regardless of the stage of your practice, The RARE Advisor will provide thoughtful guidance, suggestions for developing systems and processes that work, and ideas for creating an authentic experience for your clients.
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