Retention rates are good, he said. “Thankfully we haven’t seen many below 90 percent. At the low end we saw 60 percent. We saw one at 150 percent retention. That advisor found client accounts in other places. We usually see 95 percent within the broker-dealer, from advisor to another, because in most cases it is a block transfer of accounts or a one-page amendment of an advisory agreement, so it is really not a repapering of the account.”
It can most likely improve retention if the existing advisor stays out. This “sell and support” approach separates the business ownership and the business involvement, and reduces the retention rate risk.
Of the 140 closed transactions that LPL has assisted with over 36 months, the average GDC is $357,000, with an average sale price of $570,000.
Also, 25 percent of the deals were all cash, where because the money was up front, the buyer got a cash discount. Thirty-three percent of buyers made a down payment of the total deal price in the form of a cash payment, while two thirds financed.
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Gessert recommended pulling up all the reps in your neighborhood. He said he is seeing only a third of advisors with succession plans, stressing that everyone should have one.
LPL has three teams that all play a role in helping advisors with these issues: acquisitions, succession planning and strategic business solutions. “We see 200 to 300 valuation requests a year,” Gessert said. He encouraged the advisors in the room to take them up on the service as it is free of charge for LPL advisors.
Mike Byrnes is a national speaker and owner of Byrnes Consulting LLC. His firm provides consulting services to help advisors become even more successful. Need help with business planning, marketing strategy, business development, client service and management effectiveness? Read more at ByrnesConsulting.com and follow @ByrnesConsultin.