Your Biggest Potential Advisor Sourcing Resource

Your IBD/Platform Provider is Your Biggest Potential Sourcing Resource

In advisory M&A within the independent broker-dealer (IBD) space, there isn't a central repository for tracking and reporting all M&A activity. Most M&A transactions occur discreetly, often behind the scenes of the broker-dealer. Most advisory practices are sold within the same IBD, which is less challenging than external acquisitions which necessitate the ACAT process instead of a negative consent. RIAs focused on recruiting usually operate under a multi-custodial model, mitigating this challenge. The corporate and field leadership plays a role in connecting advisors within their platform. There are advisors who receive more attention and sourcing love from their key relationship than others. This is where you start, getting on their radar so they can factor you into the options they have on any host of deal scenarios that come up. The ideal scenario is they become aware of an advisor who is ready to sell and introduces you to the seller and even may facilitate further.

While larger IBDs benefit from extensive advisor pools, they also face heightened competition with having more advisor buyers. Conversely, smaller broker-dealers and firms may have a more limited seller pool but potentially face fewer internal buyers. The disparity in IBD seller pools can be substantial. For instance, Ameriprise Financial has more advisors aged 59 and older than over 100 IBDs have in total advisors. LPL has more acquisitions between LPL advisors annually than all the RIAs M&A deals combined (although the average size deal is less).

Take the number of advisors that make up your BD/platform and multiply that number by 25% – that is about the number of advisors which will be in the succession/exiting age zone. Divide by 50% for conservative assumption of separating those who are focused on selling to an internal advisor or through succession. While you won't be the only advisor seeking activity a 3, 4, 5 or even 10 to 20 to 1 buyer-seller ratio are better odds than an 85-1 marketplace (where you also pay a giant premium).

Do you have access to that flow? Ask how you can get access. If you’re committed to the strategy of growth through smart acquisitions and recruiting, then there is no bigger advantage than having a productive relationship with your IBD or platform provider.

What kind of corporate sourcing support is available?

Despite the varying quality of support systems at broker-dealers and platform providers, receiving quality recruiting and acquisition leads remain limited. The level of lead activity and support for inorganic growth can differ significantly from firm to firm. While your independent broker-dealer (IBD) or platform provider may not consistently deliver a quality seller to your doorstep each month or year, or every few years, many are developing self-help sourcing solutions and offering enhanced support for their independent advisors to better help themselves grow inorganically.

We have compiled a list of best practices and resources that different firms employ to assist their advisors in achieving inorganic growth. Additionally, we’ve included suggestions on how firms could further support their advisors. Of course, not all ideas will apply universally to every firm or advisor. However, these insights may inspire new approaches to providing support. Furthermore, AdvisorBox addresses many of the gaps in inorganic growth support and services that advisors need.

Advisor Sourcing Support

Lead Qualification Criteria: Inquire about the specific criteria used to identify potential buyers interested in acquiring advisory practices. Ask how to ensure your firm meets these qualifications to become a prime candidate for lead generation.

Networking Opportunities: Explore whether there are opportunities for networking through events, conferences, or online platforms that connect potential buyers and sellers. Find out how to participate actively to enhance your visibility and engagement for acquisitions.

Referral Programs: Investigate if there are existing referral programs or mechanisms within the network that recommend advisory firms for acquisitions. Learn how to leverage these to increase your firm's visibility and attract leads.

Online Listing Platforms: Determine if there is an online marketplace or listing platform for advisory firms looking to sell or acquire practices. Understand how to craft a compelling profile to draw in potential leads.

Marketing Collateral Distribution: Discover how the broker-dealer or platform promotes advisory firms interested in acquisitions through marketing materials, newsletters, or targeted campaigns. Learn how to maximize your firm’s visibility through these channels.

Strategic Partnerships: Identify any strategic partnerships or alliances that could facilitate introductions between potential buyers and sellers. Explore how to leverage these partnerships to present your firm as a valuable acquisition target.

Educational Webinars or Workshops: Ask if there are educational webinars or workshops focused on mergers and acquisitions within the advisory industry. Understand how participating or contributing can position your firm as a knowledgeable and appealing target.

Lead Nurturing Strategies: Inquire about the lead nurturing strategies employed to maintain engagement with potential acquirers over time. Discover how to participate in these strategies to remain a top candidate for acquisitions.

Feedback and Performance Monitoring: Learn how feedback from potential buyers on their preferences and experiences is collected. Use this information to tailor your firm’s offerings and presentation as an attractive option for lead generation.

Collaborative Marketing Initiatives: Explore opportunities for collaborative marketing initiatives with other firms interested in acquisitions within the network. Understand how to engage in these initiatives to boost visibility and generate leads for practice acquisitions.

Value Proposition & Pitch Deck

Value Proposition Workshops: Explore the availability of workshops or training sessions aimed at refining your unique value proposition, crucial for acquisition discussions. How can you get involved?

Marketing Expert Consultations: Schedule meetings with marketing experts to gain insights on developing a value proposition that attracts potential sellers and aligns with your acquisition objectives.

Brand Messaging Support: Seek assistance from branding professionals to hone your brand message, ensuring it effectively communicates your value proposition during acquisition conversations. What are the collaboration opportunities?

Pitch Deck Development Assistance: Investigate existing support for creating an in-depth pitch deck that highlights your value proposition, key differentiators, and acquisition strategy. How can you access this assistance?

Case Study Analysis Tools: Utilize tools or resources to analyze case studies of successful acquisitions and value proposition strategies, leveraging these insights to improve your discussions.

Competitive Analysis Advice: Obtain guidance on performing a competitive analysis to identify unique differentiators and value drivers that enhance your value proposition to potential sellers.

Peer Feedback Sessions: Participate in peer feedback opportunities to critique your value proposition, gaining valuable insights and suggestions for refinement from seasoned advisors or mentors.

Networking Events for Value Proposition: Attend events or forums dedicated to value proposition development and best practices for articulation during acquisition negotiations. How can these events help refine your messaging?

Value Proposition Templates: Use templates or tools designed to help structure and refine your value proposition, making it more effective in acquisition discussions.

Ongoing Value Proposition Support: Ensure access to continuous support for revising and enhancing your value proposition based on feedback from acquisition talks, market shifts, and evolving client needs, keeping it impactful and relevant.

Accessing Exit-Gen Advisor Resources

Retirement Transition Program: Check if your broker-dealer offers a retirement transition program or platform for advisors to disclose their retirement plans. Explore how to access this resource to connect with potential sellers.

Retirement Planning Workshops: Find out if retirement planning workshops or seminars are available for retiring advisors through your broker-dealer. Attending these workshops provides valuable networking opportunities with potential sellers.

Internal Networking Events: Look into any internal events or social gatherings designed for advisors to share their retirement intentions informally. These events are excellent opportunities to engage with retiring advisors.

Mentorship Programs: Investigate whether there are mentorship programs in place for senior advisors to guide junior advisors, which might facilitate connections with advisors considering retirement.

Retirement Interest Surveys: Determine if your broker-dealer conducts surveys or assessments to identify advisors thinking about retirement. This information can be crucial in connecting with advisors interested in discussing succession plans.

Intranet Resource Platforms: Inquire if there’s an intranet or internal resource platform for retiring advisors to post their intentions or explore succession options. This can be a valuable tool for finding potential sellers.

Manager Referrals: Explore whether managers or leadership at your broker-dealer can refer you to retiring advisors who are open to succession planning conversations. Introductions from this channel can be incredibly valuable.

Succession Planning Workshops: Ask about any available workshops or training sessions focusing on succession planning. These sessions can be insightful in understanding the needs and opportunities among retiring advisors.

Internal Communication Channels: Learn how retirement announcements or plans are communicated internally. Utilizing these channels can help you to identify advisors looking to retire and discuss potential acquisitions.

Peer-to-Peer Networking Groups: Seek out any peer-to-peer networking groups or forums for advisors nearing retirement to share their experiences. Membership in these groups can lead to productive connections with potential sellers.

Financial Support for Acquisitions & Recruiting

Acquisition Incentive Programs: Query whether your broker-dealer provides financial support programs for acquisitions, including expense reimbursements. Clarify the criteria for these benefits. Are there bonuses available for net new assets added?

Transition Assistance: For external acquisitions what support is provided and how is this determined? Does a transition team come out in person for $1M recruits and above, or never regardless? Is there support for the ACAT fees? What is the timeline process?

Marketing Expense Reimbursement: Assess if you can recoup marketing costs incurred in the pursuit of potential sellers or new practices. Understand the reimbursement submission protocol.

Legal and Compliance Support: Inquire about financial coverage for legal and compliance expenses during due diligence and acquisition, including document and approval processes.

Consulting Services Support: Discover if subsidies or financial support for consulting services, such as valuation or integration guidance, are available and how to access them.

Training and Education Opportunities: Seek information on funding for educational programs that refine acquisition strategy and best practice skills, boosting your expertise in the field.

Risk Management Solutions: Explore options for financial support in managing insurance costs or accessing risk management services to protect against financial risks during acquisition.

Technology Investment Assistance: Ask about financial aid or discounts for technological investments critical for seamless practice integration.

Succession Planning Support: Identify financial support for succession planning services, essential for smooth transitions, and learn how to access this assistance.

Performance-Based Rewards: Examine the availability of incentives linked to achieving acquisition milestones and targets, and the criteria for these rewards, to offset sourcing and acquisition costs effectively.

If you are in a scenario where there is a financial incentive (paid to advisor or to you direct) this assists in the bank financing qualification (if needed if otherwise tight on cash flow).

This article is authored by Darin Manis, founder of AdvisorBox, LoanBox & AdvisorLoans.