Shutterstock 1816522031

Avoid the Million-Dollar Mistake: Making a business case to buy a book of business

An experienced advisor seeking growth may explore the possibility of acquiring the book of business of an advisor planning to leave the industry. However, this is a significant investment that warrants careful consideration. Such a move can reveal new opportunities for growth and success, but it can also create substantial risks if not approached with the necessary foresight.

As such, it is incredibly important to remain objective and build a solid business case before taking any major steps. Read on to find out how to set yourself up for success when making a high-stakes decision, and how to avoid making a million-dollar mistake.

Assessing the investment opportunity

It's important to understand the underlying motivations for making the purchase and assess whether the investment would bring the desired returns. By taking a strategic approach, an advisor can make informed decisions that align with their business goals. It's also worth evaluating whether investing the same amount of money in a different area of the business could yield better results.

When assessing the opportunity, it's essential to ask yourself some fundamental questions to make an informed decision. One key consideration is, how much you are willing to pay for the book, along with what kind of return you can realistically expect on your investment. It's equally as important to explore the potential returns from investing the same amount of money in your directly into business.

For instance, you could invest in technology, hire additional staff, or partner with other advisors to expand your services. Alternatively, you could use a more significant marketing budget to attract new clients. Additionally, delegating administrative tasks to staff could free up more of your time to focus on client interactions.

Ultimately, the question is which investment would yield a better return for your business. By weighing the options carefully and analyzing potential outcomes, you can make an informed decision that aligns with your business goals.

Assessing the client base

To make an informed decision about purchasing a book of business, it's crucial to carefully consider your rationale for the acquisition. For instance, you might come across a book of business with 950 clients that appears to be a significant addition to your practice. However, it's essential to delve deeper into the details to understand the potential impact on your business.

One critical factor to consider is how the new client base aligns with your existing clients. Are they similar or different? What are the expected service levels for these new clients? After careful consideration, you may discover that only nine clients align with your ideal client profile. The key question then becomes, is it worth the investment to acquire these ideal clients?

To make the business case, you must evaluate whether you can generate enough business from these ideal clients to cover the cost of the purchase and the ongoing costs of servicing the entire book. Additionally, it's crucial to consider the practical implications of taking on an additional 941 clients. How will you service these clients, and what will it cost?

By taking a strategic approach and evaluating all the factors, you can make an informed decision that aligns with your business goals. This could mean exploring other options, such as investing in technology or hiring additional staff, to achieve your growth objectives. Ultimately, the key is to ensure that any acquisition aligns with your business strategy and can generate a positive return on investment.

Using a CRM to segment the new client base

Using a CRM system specifically designed and built for advisors can be an invaluable aid when assessing a potential book of business. A CRM can help to fully segment the new client base, define service levels for each segment, and provide a clear picture of all the business written with all carriers for each client. This information can help advisors make informed decisions about whether the book of business aligns with their ideal client profile and business goals.

Additionally, a CRM can provide insights into the level of engagement and communication needed for each client, as well as the potential revenue generated by each client. With this data, you can determine whether the potential return on investment justifies the cost of acquiring the book of business and the ongoing costs to service it.

Wrap Up

In conclusion, it is important to evaluate the potential acquisition of a book of business carefully when seeking growth opportunities. While some opportunities may seem like a good idea on the paper, further research could reveal that the same investment placed elsewhere might reap greater rewards. This is why it’s crucial to take a strategic approach, assess the underlying motivations, and analyze potential outcomes before making any decision.

Related Articles

The Ultimate Guide B2 C e Book Card Image 640x452

Advisor Productivity

Ultimate Guide to Digital Marketing for Advisors

If you’re eager to expand your client base and guide more individuals toward financial stability and retirement readiness, but the world of marketing feels like uncharted territory – the eBook is for you!.
Read eBook
Advance Webinars CE Credits Card image 640 x452

Corporate News

Equisoft Announces Launch of CE-Accredited Webinar Series for Insurance and Financial Advisors

The Equisoft advisor webinar series is a free comprehensive online resource comprising of webcasts that provide financial advisors with the opportunity to earn Continuing Education (CE) credits while gaining valuable insights.
Read Press Release
B2 C Image 1

Advisor Productivity

Taking the Stress Out of Compliance

Find out how a CRM can help you take the stress out of compliance and create an awesome client experience.
Read Article