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How to Better Understand the Psyche of the Seller

Selling even a portion of an advisory business is a major decision and life event. It’s not one that should be rushed or taken lightly.


There are many reasons why an advisor might sell a portion or all of their business right now. Perhaps they are triggering their succession plan. Or maybe they want to take advantage of record-high valuations and monetize a portion of their equity. Or perhaps they have simply decided they want to de-risk a bit and fold into a larger organization.

Regardless of the reason for the transaction, the truth is that selling even a portion of your advisory business is a major decision and life event. It’s not one that should be rushed or taken lightly. And it’s one that should be made alongside a partner you truly align with on both a personal and a professional level.

In all my years of coaching advisors, and now as someone who engages in M&A deals as the co-owner of an RIA, we spend far too little time making the experience about what the advisor wants and needs. Thus, I talk to many advisors who are unhappy post transaction and the reasons for that usually fit into one of three categories:

  • Misaligned expectations about “the buyer’s” role post sale
  • Realization that they have given up more control than they were ready for
  • Lack of support around continuing to grow and manage the business and client relationships

I could write 10 blogs on why each of the above occurs. Most of it has to do with the overwhelming focus on money and deal terms versus money, deal terms and cultural, organizational and personal fit. (Just because a firm is providing you with capital and access to its resources, doesn’t mean it is adept at actually helping you implement a succession and continuity plan.)

On that note, here are a few observations I’ve made about the seller-advisor that are critical to reflect on and take into account during the acquisition process.

They May Be Experiencing Underlying Fears About Losing Control

Giving up control after being the only one in charge for many years is incredibly difficult. There’s no way to sugarcoat it. For advisors who have spent their entire career in control of every aspect of their practice from business development to operations to finances to client service, the idea of not doing any of those things can be—ironically—overwhelming.

It's important to help advisors navigate this mental shift before their transition so that they can 1) have proper expectations about what will change and how and 2) have a say in co-creating what their new role will look and feel like.

On paper it may sound great to no longer have any operational responsibilities. However, if you’ve grown accustomed to being the decision-maker, and suddenly you are sharing decision-making responsibility with other (now) owners of your business, feelings of frustration and resentment can emerge quickly.

For the advisor selling: Center yourself around why you are making this transition and get into the habit of constantly self-reflecting and clarifying what you want and need. What are you excited about? What are you most nervous about? Which of your skillsets will help you during this transition? Which will hinder you?

For the firm buying: Advisors are people; they’re not transactions. Take time to understand their level of attachment to their practice, team and clients. Clearly map out what a day, week and month in the life at your firm will look and feel like post transition. This will help proactively identify pain points and will help them feel like they have control over the outcome.

There May Be a Deep Lack of Knowledge Around the Industry and M&A Broadly

Most advisors got into this business to be advisors, not to build businesses or be experts in monetizing an entity. I speak to many advisors who admit to me that they actually do not know much about selling their own business. Common questions I get asked include:

  • How do I know what my business is actually worth?
  • This firm is telling me it will give me $x to join them. What does that actually mean?
  • How do I differentiate between the different firms in the independent and RIA space? How do I know which is better for me?
  • This firm is telling me it will help me grow and buy books of business, and it sounds great on paper. How do I know if it's the right firm to partner with or not?
  • Should I even be selling my business right now?

Oftentimes advisors feel embarrassed not knowing the answers to these questions. (By the way, this is not advisors’ fault; this is our industry’s fault.) And they may refrain from asking what they perceive as “dumb questions,” so they do not look uninformed in front of an “expert” buyer or larger firm. 

For the advisor selling: Always remember that the firm is putting its best salesperson in front of you. If you feel pressure to make a decision, do not make it yet. If the firm is not asking you enough questions, or helping to educate and empower you, it is probably not the right firm. If it does not have knowledge about its competitors and can’t provide a thoughtful answer as to how it is different, or what your other options may look like, it also probably isn’t the right fit.

For the firm buying: Lead with empathy. Advisors are business owners who have dedicated their lives to building a practice, albeit by mistake for some. If you are truly a partner, then focus each conversation on the outcome that the advisor is seeking to achieve. Ask them questions like: What would be most helpful for us to discuss or review, as you think through our offer? Who else on our team would you want to talk to feel comfortable? What information do you still not yet have that would put this in greater context?

The Advisor’s Ego May Be Preventing Them From Asking the Questions They Really Want to Ask  

Most successful advisors who have built businesses as solopreneurs … have large egos. And as they should.

The problem is our egos can hinder our ability to be vulnerable. Vulnerability helps us build deep bonds and relationships; it also allows us to be honest about the things we fear, want and need. An unchecked ego can cause us to make decisions based purely on “proving a point” or not wanting to reveal our own weaknesses.

Selling a business, even partially, is an emotional process. It represents the end of the business life cycle as you knew it and opens up a new chapter professionally and personally. We should give space for all the feelings that emerge as a result, and allow ourselves the space to ask the tough questions that often get buried deep down:

  • Am I ready to transition relationships to someone else on my team? If not, is it because I simply cannot let go or because the team isn’t ready?
  • How will this transition impact the team’s development? Who will take care of them professionally?
  • Will clients feel offended by this? How am I going to communicate this decision to clients in a way that resonates and protects my relationships with them?
  • Do I really feel confident in this new firm’s ability to serve my clients and team? Or am I being swayed by their “brand name” and flashy dinners and flights?

For the advisor selling: Look to partner with a firm that has a proven ability working with and developing (diverse) people. That may seem silly since all of us work with people daily. But the reality is many firms have tons of capital and are skilled at landing and closing transactions. That does not mean they are adept at managing people, building a diverse business, adapting to a changing consumer, developing talent, etc. These are all the things you need to have if you want your business to endure and sustain long after you’ve retired.

For the firm buying: If an advisor is pushing back on deal terms, it does not mean they are hostile or difficult to work with. They may be struggling with aspects of the transition that haven’t been addressed and that have nothing to do with money, including timeline and process. Help the advisor visualize the ways in which they will maintain control and ownership during and after their transition.

On a final note, for advisors looking to sell or merge: Always remember that this is your experience, and you get to define the who, what, where, when and how.

Penny Phillips is the co-founder and president of Journey Strategic Wealth. 

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