Acquiring another Independent Financial Adviser’s book is a natural progression for some advice practices.
However, it’s difficult to know what’s really going on under the hood.
When you buy another IFA’s book, you’re effectively investing in projected revenue. Superficial number crunching can give you a decent sense of current revenue, but that’s not an effective way to analyse earning potential.
In order to make an informed evaluation, you’re going to have to dig deeper.
Or consider the reverse scenario. You’ve built up an impressive practice, with a loyal client base. You’ve worked hard to provide your clients with the products and advice they need to successfully secure their financial wellbeing over the long term.
You have now reached the point where you need to start thinking about succession planning. This most likely includes ensuring that your book is acquisition-ready. For this you require hard data that shows just how good your fundamentals are.
Commspace gives IFAs access to the data they need to do precisely that. Our extensive reporting and easy-to-understand visual analytics give you the insights you need to make more informed data-driven decisions.
Follow the money
Consider a practical example.
Suppose an experienced IFA is nearing retirement and approaches you regarding succession planning. The IFA is highly respected in the industry and has built up an impressive roster of high-income clients.
So far so good.
Now you run the client data through Commspace Analytics. A quick glance at the dashboard reveals interesting patterns.
You see that a high proportion of the revenue comes from clients over 72 – much higher than the industry average. That raises questions about long term sustainability.
So you ask the software to segment clients further by product. Immediately, you notice gaps in younger clients’ investment portfolios. In your professional opinion, they should be planning more carefully for the future. You believe you have the means and expertise to offer the holistic advice they need.
In a matter of minutes, the data visualisation dashboard has provided you with two crucial data points that fundamentally transform your understanding of the client base.
Gleaning that kind of insight from the raw data would have given a team of forensic auditors sleepless nights.
A suitable match?
Now consider your potential investment in terms of your own practice. What areas do you specialise in? Which new products would you like to start offering clients?
Using the automated Commspace platform, you can immediately compare your spread of products with the clients on the book you’re looking to acquire.
Would the acquisition be a good fit for your areas of specialisation? Perhaps it presents an opportunity to share your expertise in a particular area of financial planning.
Once again, simply going through a raw data dump would make it almost impossible to obtain all the relevant information you need to make an informed decision.
Fortunately, there’s an elegant and simple way to acquire strategic insights. Not just what the data says, but what it means for your business.
Data analysis enables IFAs to make informed evaluations based on revenue information, taking much of the guesswork out of book valuation.