For Buyers Only

“I am the master of my fate; I am the captain of my soul”

I Know, Right?
Henley’s popular poem Invictus was a favorite of Nelson Mandela’s and my grandmother. These lines could be the mantra of most advisors whether buyers or sellers.

Advisors have grit. This grit is both the source of our success and the essence our vulnerability. As a buyer, your goal is to grow inorganically. You know you have a lot of company. Our advisory world is full of buyers with few sellers to be seen.

In a recent RIA Match Satisfaction Survey 62.7% of the subscribers who completed the survey said their primary goal on RIA Match was to acquire other firms. This is indicative of the industry as a whole. There are many complexities that surround the shortage of sellers. Sometimes would be sellers recoil from the advances of buyers. Buyers are puzzled at sellers’ reactions. We need to have a greater understanding of the possible causes of the seller’s response.

Here are some observations that may explain the seller’s reactions and my apologies if I offend.

There seems to be a tendency among new entries into the independent advisory space to think that they can buy their way into the industry without offering an obvious advantage to the seller besides cash.

There seems to be a tendency among advisors to commoditize other advisors practices while holding up their own as unique.

There seems to be a tendency for buyers to negotiate as if they are brick walls, giving very little.

We are too close to the canvas to see these traits in ourselves.

Of course, not every buyer has unbridled hubris; but there are enough out there to taint the waters and it makes it harder for the rest.

How do we best position ourselves to be successful buyers?

Having well thought out answers to a few questions is a great start.

What do you have to offer a seller and their clients?

Why should they select your firm as the next shepherd of their clients over someone else’s?

Remember this is about more than money.

How will you help the advisor exit and keep their dignity in tact with their clients and their staff?

How will you interact with their clients? Will the tone and feel of the client relationship remain?

And, what is your value proposition?