Advice force changes: Hunters out, farmers in

Selling a book of business is a different proposition in 2018 than it was a few years ago - and not just because average values have increased substantially.

Tuesday, January 16th 2018, 6:00AM

by Susan Edmunds

Mike Moore specialises in helping financial advice firms sell their books of business. He said, when he first started his firm, most clients were independent advisers who had begun on their own and developed their businesses, then wanted to sell.

But as the years had gone on, there had been a shift to more mergers and acquisitions rather than outright sales, he said.

Some independent advisers looked at the increasing regulatory and compliance requirements and deciding that going it alone was uneconomic, he said. Many were personality-driven salespeople who thought processes and procedures were "a bit of a pain", he said.

Bigger firms could end up with a mix of apprentices, people who could go through the advice process without the "hunting skills" of traditional advisers, advisers who could farm and a couple who could hunt.

More deals involved advisers staying to service at least some of their clients, Moore said.

"The individual farms that were selling milk at the farm gate are now part of Fonterra. That's a big change and it's happened quite quickly, that shift in mentality."

Some big groups were buying books to feed clients to salaried advisers, he said.

Five years ago individual books would have sold for $150,000, on average, he said. Now it was more like $600,000, putting them out of the reach of most individual advisers.

Moore said 90% of his clients used to be sellers but now he was often acting for buyers looking for the right books to fit with their businesses.

He was often asked to value books or to work in conjunction with trainers - because the skills required in a multimillion-dollar operation were different from those needed in a one-person business.

Tags: financial advisers Mike Moore recruitment retirement