Transitioning Clients During a Financial Practice Acquisition

06 Feb
transitioning clients

Transitioning Clients During a Financial Practice Acquisition

The value of any financial advising firm lies in its book of clients. It’s that value that serves as the basis of monetary worth during an acquisition. The projected return on investment justifies the expense of purchasing, that is, if the buyer can maintain that book of business once the deal is closed. As lending experts, we have strong relationships with trusted advisors with experience managing acquisitions. Below are their recommendations on strategies to retain clients after an acquisition.

Start Building the Client Relationship Early

Although brand loyalty is an element of client retention, people ultimately feel a sense of loyalty and commitment to other people, not brands. Get in front of the seller’s clients early, before the acquisition begins, and start building a relationship with each one. Not only does this give clients time to acclimate to the new culture and procedures of your business, it also gives them time to get to know you and your team. This helps develop trust, a critical foundational element of client relationships and of building loyalty.

Another simple and effective way to build those relationships is by keeping client-facing employees on the payroll. Our lending professionals specifically look to see if and how many client facing employees will remain after the acquisition, as our experience shows this to be a critical success factor in terms of preserving revenue. Preserving and growing revenue is a key indicator of repayment ability and a determination of the level of risk the bank will incur. The lower the risk, the more likely it is the loan will be approved and with favorable terms.

Communicate Often and Honestly

Acquisitions are stressful and scary, not just for employees, but for clients as well. Some firms take the “need to know” approach and release little to no information about the process or what to expect from the change in ownership. In the absence of information, fear and speculation are allowed to breed and give birth to “worst case scenario” thinking. In that environment clients don’t feel safe and will take their business elsewhere.

Instead of restraining communication, you should communicate early, often, and honestly with clients. Let them know what to expect before, during, and after the acquisition. Give them resources and contacts to reach out to for questions. Create an open line of dialogue, allow them to voice concerns, and address them in a timely and transparent manner.

Oftentimes, sellers working with acquisition experts are asked to develop client communications strategies with their broker/advisor. Anthony Whitbeck, CLA, CFP, and CEO of Advisor Legacy states that they require their sellers to develop communications and to break down their client lists into A, B, and C client groups. This is often done before they make the business available in the marketplace. As a result, they come in prepared with strategies and tactics for engaging high value clients and for communicating the transition and introducing the buyer. This is a significant advantage to working with experienced succession experts, as they have a model for success for both parties to follow.

Connect Each Firm’s Value Propositions

The firm’s clients have chosen to do business with them because they receive value, not just in terms of financial guidance, but other areas as well. You are purchasing them because you also see value, not just financially, but strategically. You also know that your firm has value to offer those clients. Help clients connect the dots by highlighting the link between the value they have been receiving and appreciate in the existing firm with what they will receive under your ownership and direction. If you are retaining any key value elements from the existing firm, such as respected advisors, technological solutions, or partnerships, communicate them as well. This will provide consistency and security during the transition

Clients are always happy when they can keep what they have while getting more and/or better value. Highlight the added value you bring to the table. Show them how you can take them further, protect them better, understand them more, and can help them reach their goals in more efficient and meaningful ways.

Taking the time to engage and build relationships with clients before the acquisition begins helps to protect your investment. Clients have options and can choose to walk away even though you’ve paid for the privilege to do business with them. Employing these simple, and effective strategies ensure that the business you buy is the business that stays.

Thinking about buying a book of business?

The free Financial Acquisition Guide gives you a roadmap to the acquisition process. Download now.


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