Should You Buy Your Partner’s Book of Business When They Retire?

Should You Buy Your Partner’s Book of Business When They Retire?

March 14, 2022

You have spent years building your business with your partner, and now, they are getting ready to leave the firm. But that doesn't have to mean that their clients have to leave the firm. Instead, you may want to buy your partner's book of business and try to work with their clients.

Is buying your retiring partner's book of business the right idea for you? To decide, you may want to consider the following elements.

Competition for Clients

When deciding the value of your partner's list, look at the other competition in the area or that people are likely to access online. If your partner's clients are likely to flock to a competing financial professional, buying the list may be the right move. In contrast, if everyone is already committed to using your firm and not likely to turn to competitors, you may be able to get their business without spending money on the book.

Your Potential for Growth

Do you have time to take on more clients? Are you satisfied with your current client list? If you don't have the time or interest in expanding your business, you may not need to buy your retiring partner's book of business, but on the other hand, if you're ready to expand, you may want to snap up the list and reach out to those prospects.

The Quality of Leads

When you buy your partner's book of business, you are not necessarily guaranteed to land any of those clients. Some may want to switch to a new financial professional. Others may be happy to let their investments ride without a lot of direction.

If many of these professionals are about the same age as your partner, they may be retiring or getting close to retirement, and they may no longer need much help from a financial professional. Make sure to think about elements like these when you're assessing the quality of leads from your partner's book.

Your Business Culture

The way your firm organizes each partner's book of business has a big impact on your corporate culture. Traditionally, in most firms, everyone maintained their own books, but this created a silo culture. Now, many firms are moving to a more cohesive setup.

If your firm used to have everyone working on separate books of business but now you want to transition to a different culture, you may want to buy the books.

Client Connections

Financial services aren't just about the numbers. You also build a relationship with your clients, and you may want to consider whether or not you are going to be able to connect with the clients in your partners book. To make this transition more successful, you may want to decide whether or not you are buying the books a couple years before the partner retires.

Then, you can slowly transition those clients to yourself or other professionals in the firm. During the transition period, your partner can introduce you to the clients and you can work with them. Then, by the time your partner retires, you have already started to foster connections with their clients.

LPL Financial does not provide business valuation services.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial professional prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly.

The information provided is not intended to be a substitute for specific individualized tax planning or legal advice. We suggest that you consult with a qualified tax or legal advisor.

LPL Financial Representatives offer access to Trust Services through The Private Trust Company N.A., an affiliate of LPL Financial.

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