blue paper

You're likely too busy to read a white paper today so enjoy our weekly Blue Paper where it’s all about the highlights.

Week : 05/23/2017

blue paper

You're likely too busy to read a white paper today so enjoy our weekly Blue Paper where it’s all about the highlights.

Week : 05/23/2017

This Weeks Blue Paper Topics
  • Wirehouse Advisors Putting $800 Per Day on Their Manager’s Desk
  • Growth Through Acquisitions. Brilliant!
  • 5 Waves of RIA M&A Activity
  • Producing Branch Managers Back in Demand
  • Are You on Our Buyers List?
Topics From Previous Issues

Blue Paper By Advisorbox Week of 5/15/2017
  • Merrill Gets Booted From The Adult’s Recruiting Table
  • Our 10? Favorite spoofs and one-liners about the new Merrill Lynch Recruiting strategy
  • Where Are The Largest Recruiting Bonuses Now?
  • 5 Advisor Contingency Plans
  • What Written Signatures Reveal About You And Your Clients
Blue Paper By Advisorbox Week of 5/08/2017
  • Wirehouse Advisors: Financially Advising Yourself
  • Wirehouse Advisors: What Are You Really Getting paid?
  • No succession plan? No problem. Maybe...
  • Survey: Times Are Good For Small Business Owners
  • 2017 Starts with record quarter of RIA M&A activity
Blue Paper By Advisorbox Week of 5/01/2017
  • Acquisition Financing is Skyrocketing
  • Top 10 Seller's Markets for Exiting Advisors
  • Advisorbox Top 10 Seller States for Exiting Advisors
  • 2016 Best Ranked Cigars And Where to Get Them
  • 7 Ways to “Hack” Your Interactions with Candidates
Blue Paper By Advisorbox Week of 4/24/2017
  • 5 Things To Do When First Considering Selling Your Practice
  • Get Out Of My Personal Space
  • FICO Knows A Lot About You But What Do You Know About FICO?
  • FICO Score Minimums For Business Loans
  • FICO’s 5 Components Of Your Credit Score
Blue Paper By Advisorbox Week of 4/17/2017
  • Advisorbox is expanding our “Buyer Listing”
  • Qualify at about 6x to 7x your revenue for SBA acquisition loans
  • Qualify for 7x annual debt payment
  • Business Loan Rates are Increasing
  • Increased cost of capital consequences
Blue Paper By Advisorbox Week of 4/10/2017
  • 2017 IBD Report Card
  • J.D. Power 2017 Top 10
  • J.D. Power 2017 U.S. Full Service Investor Satisfaction Study
  • 2016 Insurance M&A
Blue Paper By Advisorbox Week of 4/03/2017
  • RIA M&A Getting Stronger In 2017
  • Don’t Be Held Hostage By Your Deferred comp
  • Deferred Comp Replacement Options
  • Busy DOL Week
  • 3 complications With DOL Timing And Outcome
Blue Paper By Advisorbox Week of 3/27/2017
  • Takeaways from 2016 M&A Data
  • Soft Landings for Breakaways
  • Breaking Down Soft Landings
  • April Fools Day: Two-Year Reprieve
  • AdvisorboxMedia Twitter Feed: Consolidate Industry Tweets
Blue Paper By Advisorbox Week of 3/20/2017
  • 10 Ideas To Attract Growth-Minded Tuck-Ins
  • SBA Loan Property Liens – 5 Things To Know
  • Birthday Paradox
  • Week In DOL
  • Advisorbox Directory Tops 200
Blue Paper By Advisorbox Week of 3/13/2017
  • 8 Reasons Why Advisors Are Still Moving Firms In 2017
  • What To Do If You Get Terminated
  • March Madness Begins This Week
  • Recruiting Advisors For Your Independent Advisory Firm? Prepare Your Brand
  • DOL Weekly
Blue Paper By Advisorbox Week of 3/6/2017
  • DOL Weekly Update
  • 5 Tips for Finding Sellers
  • 5 Buyer Preparation Tips if You Will Need an Acquisition Loan
  • Ready to Start Acquiring Practices? 10 questions to ask your broker dealer
  • Recruiting: Passive but Open Minded
Blue Paper By Advisorbox Week of 2/27/2017
  • DOL
  • Retiring in 10 Years? Maximize what you monetize
  • How Buyer Loans Impact Sellers
  • Raider Rules Radar
  • Recruiting: Passive but Open Minded

Wirehouse Advisors Putting $800 Per Day on Their Manager’s Desk

Are you a wirehouse advisor with more than 80% in managed money? If you fit this description then in the most simplistic terms you are an RIA operating within a wirehouse.

The NYSE is open 252 days a year. A $1MM revenue wirehouse advisor payout 45% = $450,000 annually. Compare to a $1MM revenue independent advisor net payout after expenses at about 65% = $650,000 annually. What’s The Difference Per Work Day? $800!

$800 per day is what it costs you to support a wirehouse model that you do not fully utilize or even require.

If you are using primarily managed money for your clients then you rarely use (or even need) the BD side of the balance sheet and yet you are paying $800 a day for it.

The wirehouse model is designed around an age old symbiotic relationship which many advisors no longer need – gone are the days of huge syndicate allocations, trading equities based on what your analyst said on the morning call, and taking down preferred offerings to work.

What an advisor no longer uses or needs is still necessary for a wirehouse to exist. You are paying for all those divisional managers, all the bankers, analysts, all the departments which support all those areas that have nothing to do with you or your business. You are even paying for those consultants, which tweak with your payout every year and produce those 26-page grid & compensation reports.

By going to an independent broker dealer or RIA you get to not only keep a lot more of your money but also receive the benefit  of the significant valuation bump you get by owning your own practice

You are a financial advisor, financially advise yourself.

Give AdvisorBox a call whether to have us do an independent vs. wirehouse pro-forma for you and guide you through the options available. It doesn’t cost you anything to compare options and it could put $800 a day back into your pocket!

Growth Through Acquisitions. Brilliant!

About 30% of financial advisors are reaching retirement age over the next ten years and right now about 70% of them don’t have a succession plan or successor. On the surface, that seems to be a formula for acquisition success.

Most every advisor it seems wants to buy a quality practice, especially one located in their backyard. Unfortunately, for eager acquirers, it is a sellers market and competition for quality practices for sale is fierce. On your own, or partnered with the wrong firm and broker dealer, the challenge can be daunting.

The real volume of acquisition deals isn’t found through bulletin boards, bid sites, or from third party consultants like Advisorbox (although we do our part!).

The truth is, the real seller volume in the market you don’t hear about (outside of mega firm acquisitions) because it is done internally with two advisors within the same broker dealer.

If growth through acquisitions is a top priority, then the first thing you need to evaluate is if you are partnered with a broker dealer that not only supports your growth through acquisition strategy but also substantially increases your options and chances of acquisitions. We ask every advisor that reaches out to us “what is your firm doing to support this strategy?” The vast majority of advisors reply “Nothing”. If your firm is not supporting your growth via acquisition than your firm is missing one of the greatest opportunities for growth that the wealth management industry has ever experienced. We have identified and are coordinating with multiple firms which are implementing or have implemented internal systems to allow their advisors to take advantage of this wave of retiring advisors. Heres a simple formula: Take the # of advisors that make up your BD and multiple that number by 25% – that is the number of practices which will be for sale in the next 5-10 years. Do you have access to that flow? If not you should consider reviewing your options.

If you’re committed to the strategy of growth through smart acquisitions, then there is no bigger advantage than being partnered with a BD that offers the scale of retiring advisors each year and the resources to assist you to grow through acquisitions.

A few broker dealers facilitate hundreds of full or partial acquisitions each year, some dozens, but for most BDs there are only a few acquisitions done each year. If you’re fishing for sellers, you increase your chances of success when fishing in a stocked pond.

However, the size of the broker dealer isn’t the only factor of course. You’ll need not only quantity but a BD with dedicated resources, expertise and experience in helping their buying advisors get matched with retiring advisors.

Finding quality practices to buy is hard to do on your own. Being plugged into the right broker dealer increases your opportunities and the odds of implementing a smart acquisition growth strategy.

If acquisitions are an important part of your strategy call Advisorbox to discuss the options that can put you in the most ideal scenario for inorganic growth.

5 Waves of RIA M&A Activity

DeVoe & Company breaks out the 5 waves of RIA M&A activity in their latest RIA Deal Book. The RIA industry is currently experiencing the initial impact of two new waves of RIA acquisition activity, which will likely contribute to accelerated consolidation. Understanding the Five Waves of M&A Activity helps provide context for our current and future acquisition environment. 

Wave 1: Banks
Fifteen years ago, Banks dominated RIA M&A. Mellon, Wachovia, and others were acquiring 60% of the sellers – many of them $1B+ RIAs. With incremental revenue modeled from extensive cross-selling expectations, RIA valuations increased and moved toward the industry’s record high in 2008. However, the mortgage and banking crises eliminated Banks from the buyer pool – and they have only recently begun to re-engage with the opportunity. 

Wave 2: Consolidators
After some false starts by Assante and NFP, the ‘Roll-Up’ model started to gain momentum in the mid-2000s. Consolidators like Focus, United Capital, and WealthTrust became acquisition machines, with refined business models and deep private equity pockets funding their efforts. From a peak of over 35 Consolidators in 2008, the group itself has consolidated. Some firms exited the business, others sold to broker-dealers or banks, and now some are being acquired by consolidators (HighTower announced they are acquiring WealthTrust). Consolidators are a dominant acquiring force in today’s market.

Wave 3: RIAs
As Consolidators became the headline story, RIA firms realized the potential power of inorganic growth – especially given the backdrop of aging RIA owners. Many RIAs quickly became more sophisticated in M&A and capitalized on the attractive pitch of “sell to us – we are an RIA and understand you”. RIAs have since arm-wrestled with Consolidators on a quarterly and annual basis for the leading market
share of sellers.

Wave 4: Private Equity-Backed RIA Serial Acquirers
After years of backing the business plans of Consolidators, Private Equity has recently changed tack. During the last few years, Private Equity has cut out the middleman and made direct investments in multi-billion dollar AUM firms – with the explicit intention to grow the acquired firm through additional acquisitions. Mega-firms such as Mercer, Wealth Enhancement Group, Carson, and now Edelman not only now go to market with the deeper pockets and M&A expertise of their private equity partner, but they also can tell the “we grew to several billion in AUM – we can help you do the same” story.

Wave 5: Sub-Acquisitions
Sub-Acquisitions have quadrupled since 2014 and now comprise 22% of all Established RIA transactions. Parent companies are providing their affiliates (previous acquisitions) with the capital and M&A expertise to become acquirers themselves. With well over 100 affiliates in the marketplace today – each of which can acquire mid- and small-firms that Consolidators would historically pass over, the potential impact of this wave may be profound.


Producing Branch Managers Back in Demand

Are you currently a producing manager looking for a better opportunity? Do you have a Series 9 but aren’t using it? Have you always thought about getting into management but did not know how?

At Advisorbox we service the entirety of the wealth management sector…with an emphasis on the word management. Whether it be finding you the best firm or platform to manage your clients money, or to find you an actual career in management.

At present, we have over 20 producing branch manager positions we are filling. We are also looking for complex managers (more than 1 office) and a few regional recruiting directors slots.

The reason for the word producing prefacing the word manager is that over the past several years many firms have moved to the model of having a producing managers. For one, the old phrase “it takes one to know one" comes to mind.  Additionally, as many firms have expanded their offices and grown into smaller markets, the need for a producing manager becomes more important to cover expenses.

If wealth management is your passion and your calling and you have always wanted to be a leader, a recruiter and an inspiration –  then consider being a manager.

If you are presently a manager and you feel like you are under-appreciated, under-paid, or you are not in a geographical location that is to your liking, reach out to us.

As always, any inquiries are confidential. We represent multiple firms and platforms.

Are You on Our Buyers List?

If you’re in acquisition mode or would be open to acquiring the right practice in your own back yard consider getting on the Advisorbox Buyer List.

It’s free to be on the list (although there is a success fee) and the steps are simple:

  1. Complete our Buyer registration form.
  2. Have a detailed conversation with us about your practice and the types of practices you are interested in acquiring.
  3. Complete our Buyer Profile Summary.

When we have sellers interested in being introduced to our screened buyers we hand select just a few of the most ideal buyers from our Buyer List. Our sellers don’t want the auction model and they don’t want us sending them dozens of buyers to evaluate.

Advisorbox screens and matches just a handful of ideal buyers for our sellers to consider. It’s both a targeted and thoughtful approach.

Interested in becoming a pre-screened buyer? Start with completing this registration form and we’ll contact you to discuss the process.


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