Winning: Succession Link

We can’t say his real name for reasons that will soon become clear, so let’s call him “Carl.”

Carl recently had a good experience with Succession Link, a marketplace for those looking to buy or sell financial-advice practices and an affiliate of Chalice Financial Network. But before we provide more detail on that, let’s provide some background.

A veteran advisor, Carl has been an insurance agent for more than four decades, and, for almost as long, a securities broker and an investment advisor representative. He also advises about a half dozen employer-sponsored 401(k) programs. In addition to being skilled and experienced, and running a well-diversified practice, the Midwesterner has an immaculate record, with no customer complaints on file with Finra, the SEC, or anyone else. But for all these positive attributes, Carl never gave much thought to the value of his practice. "I guess it just wasn’t a priority," he tells the Grail.

It’s not like Carl was indifferent to his own retirement either. As you might expect of a private-client and institutional retirement expert, he was saving, and he was making plans for his own post-work life. "I’m in my mid-sixties," says Carl. "I have to be realistic."

But Carl didn’t think his book of business had resale value of any significance to his retirement plans. He knew he’d soon have to take measures to ensure his clients were in good hands in case something happened to him, but that was as far as his thinking there went. For him, taking action on such considerations was a matter of a smooth succession in the name of best practices and responsible stewardship, and he’d get to it as soon as he could.

Then, about a year ago, Carl got a notification in his email inbox about a business-valuation webinar, which he ended up watching. That experience got him curious for the first time about his own practice — which, though contractually his property, was housed in several silos owned by a broker-dealer that in turn owned an RIA, an insurance business, and, thanks solely to Carl, a small 401(k) business.

So Carl did some poking around online, and quickly found Succession Link. He posted a profile of his business on its marketplace interface — and, to his genuine surprise, got flooded with responses.

"It was a great experience,” Carl says. “I got fifty responses within a few weeks from really qualified, really good people. I mean high quality, ethical people."

Discussing his practice with some of these interested parties led him to understand his business was worth more than he’d initially thought. In the end — informed by the Succession Link community — Carl fetched a good third more than he thought he might get when he first turned to Succession Link. "The premium I got was linked to a couple of things," says Carl. "I have a clean track record, and I think people liked the recurring-revenue aspect of a fee-based business linked to a 401(k)-plan that’s not dependent on trades." In the end, and with other prospective buyers in reserve, Carl chose the broker-dealer he was with at the start of his journey — and that firm isn’t keen to advertise the transaction, hence Carl’s anonymity here and his reluctance to share the financial details of the transaction.

Besides giving Carl a price he was happy with, the arrangement with his broker-dealer gave him a team of three successor-advisors to take over different aspects of his business. Just as important, this in-house arrangement to monetize his practice meant his clients wouldn’t have to re-enroll their accounts.

"It worked out very well," says Carl, adding that in fact the transaction has transformed, for the better, the basic assumptions of his personal retirement planning. "I had no idea my business was worth what it turned out to be worth."

tl;dr: With help from Succession Link, a veteran advisor we’ll call “Carl” stumbled into the realization his practice was worth a lot more than he’d realized.