Book Brokers assist financial advisors either selling their book of business or transitioning their book to deliver regular, on-going, monthly referral fees through a referral arrangement with portfolio managers.
Most often financial advisors opt to receive referral fees for a number of years and contractually selling their book at a future date based on a certain defined formula that is a function of the size of their book of business at the valuation date in the future.
Since the mid-1990 compliance changes in the industry have significantly increased the time financial advisors need to devote to compliance matters and their costs of doing business has gone up. Moreover, on the revenue side, financial advisors are facing lower commissions and fees.
Given the above, it is a bit surprising that while the average age of Canadian financial advisors is over 50 years and getting older, many of them still don’t have a proper succession plan or an exit strategy. The following two articles published on August 24, 2018 and July 12, 2019 both by The Investment Executive: https://is.gd/Successionforadvisors and https://is.gd/agingadvisors are good articles about the issues aging financial advisors are facing nowadays.
If you are a financial advisor and been in the business for 20+ years you may have already been thinking of either selling your book or ways to reduce your workload to have more free time or even retirement. Having said this, many put the thought of selling their book of business or drafting and implementing a succession plan to the backburner.
As financial advisors age, their book of business typically is getting bigger, while naturally their ability and willingness to work will slowly decrease. The larger book of businesses typically have larger number of clients. In our ncreasingly more regulatory environment hungry to find infractions and culprits an advisor with a large book have a higher propensity to encounter potentially financially devastating events in the future (everything else being equal). Also, it is important to note that the Canadian public is getting more litigious by the year. Especially after an experience of a larger loss on investments in equities, a few clients could very well be inclined to sue their financial advisor.
The other, that could be maybe even more risk is that, ageing financial advisors face is that by postponing the sale of their book of business or having a succession plan is the risk of a sudden serious illness or death. If any of these events happen the value of their book of business significantly diminishes, if not to zero. A $50 million book of mutual fund business is currently valued between $750,000 to $1.5 million depending on a few factors. Potentially losing all or most of this value could be extremely devastating for your and your family’s future.
Fortunately, there are ways to reduce the above risks by either having a solid and implemented succession plan or selling your book of business or referring your business to a portfolio manager who will eventually buy your book of business at a given future date. That you take one of these actions is essential to your and your family’s financial health.
Book Brookers works with portfolio managers who manage portfolios of stock and bonds and/or mutual fund books, either through a referral arrangement, purchase agreement or a combination of these two, all of which pay the advisor a referral fee, and eventually, a business buyout if so desired. Your referral fees would continue to grow in two ways. The first would be from the investment performance of your book; and the second, from any clients, referred to the portfolio manager by you and/or by clients of your book.
If you are interested in exploring this opportunity further, please contact Book Brokers at info@bookbrokers.ca for a no-obligation referral fee projection or to meet. In most cases, you could expect to make significantly more net income by transitioning your business to a portfolio manager compared to what you would be making without any changes to your business.