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Jul 13, 2006 4:48 pm

Looking for feedback on the pros and cons of buying a book.  Any comments are welcome.

Has anyone registered on this website?

I know you can look for free.

Jul 13, 2006 5:15 pm

Maybeeeeeeeeeeeeeeeeeeeeee - I had a friend who went through this process.  Below are the most important items to note:

1 - It's all about the transition.  Have a two to three year transition plan.  His was structured with an elderly gentleman in the branch.  The first year was introducing 'Bill' as a new member of the elder's business.  The second year was 'Bill' doing most of the work and conducting most of the meetings - having elder come along on the big accounts.  The Third year was 'Bill' doing everthing - with the option of calling elder off the golf course to handle a 'crises' meeting or two.  Don't buy a book cold turkey - you'll lose most of the clients, must have succession plan.

2 - It's all about re-occuring revenue.  If you have a preference - buy a practice that's producing re-occuring revenue (like fee-based business).  If you buy a practice that's loaded up with annuities and B-shares - you won't make any money for seven years.  The re-occuring revenue book is more, but much easier to transition.

3 - It's all about the high commission clients.  First thing you do after buying a practice is to break it down three ways.  A. Identify the top 10 - 15 relationships who are paying the most commission throughout the year.  This is your retention list - people you cannot lose.  Treat them like royalty, show up on their doorstep with flowers.  B. Look for relationships who have high assets, but low commissions.  This is your list of opportunities.  C.  Identify the 70% of the practice who only represent 5% of the commission.  Don't speak to this group until you've secured the first two groups.

Good luck!

Jul 13, 2006 9:30 pm

Bought part of a retiring broker’s book.  Ended up with alot of 80+ year olds that used to be active, but living off systematic withdrawals.  Am getting some trails and have activated some dormant accounts.  I have to give 25% of payout derived from these accounts until the loan is repaid. Needless to say, I don’t make much off them.  Then again, it’s more AUM.

Jul 14, 2006 1:32 pm


Generally, how did you value the retiring broker's book?  Does the 2.1x recurring revenue that FP Transitions quotes make sense when you bought this individual's business.  Did you use an outside service to consumate the transaction or was this done in house?


Jul 14, 2006 5:34 pm

Honestly, I don’t know how it was valuated.  It was an in-house deal and basically take it or leave it.  I’m at a wirehouse and here, if a broker retires, he/she sells thier book.  I only had the option of taking it.  The loan has to be repaid in 5 years.  All encumbered accounts have a separate broker number and 25% of payout is garnished.

Jul 17, 2006 4:53 pm

Excellent information.  I agree, it would be very difficult to service a book where you are left with annuities, and A shares that the previous broker took all of the revenue from. 

 You would have to hope she was not a good profiler and that the clients have more money somewhere.

Jul 25, 2006 1:39 pm

Definately look at the book, in depth.  You should also see if the retiring broker has a similar business model.  If you do 90% growth, and they have all muni buyers, there is a potential, you will be in for a rude awakening.