Looking for some guidance. I have a chance to purchase assets of 12mil, 210 client accts. LPL accts. 6mil in mostly A share, some c. 2mil in annuities, L share, paying 1% trails. The rest in the normal bond and stock accts. He wants me to make an offer...I have no idea where to start. Any ideas??? Illness is causing this move, will stay on to help the transition. Production in 07 was 122k...
No experience but generally I’ve heard 2 times recurring and 1 times non recuring revenues. Sounds like maybe 45k in recurring and 77 non so that would be 167k, but that is very ballpark and obviously depends on quality of clients and ability to retain. 210 accts sounds like quite a few for 12 mil. I think 122 would be a closer number.
I would ONLY offer 2 times fee-based assuming that all the fee-based accounts were in a TAMP (turnkey asset management program)…
There isn’t a chance that anyone should just offer 2 times fees because the clients are in a fee-based platform. If you can manage the assets in an efficient manner - i.e. hit a button and rebalance 100 accounts simultaneously - then, and only then, is it worth 2 times revs. If you have a bunch of fee accounts on your hands, and they are non-discretionary clients without the added benefit of being able to manage them effectively, they are worth far less… more like .75 to 1 times revs.
Full trading discretion + trading platform = 2 times revs.
Anything less is worth FAR less, in my opinion. There isn’t a chance in hell that I’d be willing to pay 2 times revs for a group of non-discretionary fee-based clients.
$122K production / 210 acct’s = $581 rev / per customer. There’s either a whole lot of opportunity there or a lot of unloved customers.