First, says Paul Saganey, founder and president of Integrated
Financial Partners, bring your database into the 21st century. “You
want to organize that back office and get the database in the best possible
shape,” Saganey tells PLANADVISER.
The first step is dumping those file cabinets full of paper.
“Get away from paper as much as possible,” he says. "Nobody wants file cabinets
full of paper.”
Jay Wells, an adviser at Foresight
Wealth Management, agrees, noting that most advisers who are thinking about
transition are old school. “They love their filing cabinets,” he tells
But when Wells bought a practice
that had all client records on paper, he immediately thought, “We have to hire
some part-timer to scan this stuff and put it into the system, and throw the
Wells points out that the cabinets
hold a great deal of vital information, but says his practice is almost completely
paperless, which he maintains increases the value of a practice.
Cutting down on paper and
last-century equipment is part of the general spruce-up that advisers who are
selling need to pay attention to. “They need to do a better job or presenting
their data to their prospective buyers,” says Danny Sarch, president of Leitner
One possibility Sarch suggests: An
up-to-date list of clients, without names, shown in a presentable and organized
way, that shows household size, number of years as a client, frequency of
conversations and meetings, and the age of members of the household can distill
all the key facts about the client base.
The database should be ready to go,
Saganey says, an example of how the practice operates efficiently and effectively.
“The more organized you are, the more revenue can increase from a more
efficient back office,” he says.
Wells says that not being
completely familiar with the practice’s clientele can hurt valuation. “Clean up
the books,” he suggests. Some advisers don’t know all their clients, and they
don’t know the numbers. “Some books are full of old clients that are more
maintenance than profitability,” he says, which is a definite negative. Someone
may have 300 clients, but only 50 are actually generating profit. And one
client with $3 million in assets will take the same amount of time as one with