top of page


Public·101 members

Buying A Book Of Business

Whether you are just starting out as a financial advisor or you are simply looking to expand your established business, buying an existing book of business could be the right move for you. Opportunities for business acquisitions are becoming ever more common, as the average age of many financial advisors edges closer to retirement.

Buying A Book Of Business

While strictly a necessity for those with enough experience, getting legal advice before purchasing a book of business will almost never prove to be a bad move. Even if you have a straightforward verbal agreement, it is easy to miss the finer details in a written contract. Hiring a corporate lawyer can save you a lot of trouble that you might need to face if you only find these discrepancies after the fact.

Potentially saving you a lot of trouble and heartache, a corporate lawyer can also help make sure that the person selling the book of business is actually authorized to do so. Even if this is not the first time you have entered such an acquisition process, having a professional ensure that you are not getting worked over can be incredibly helpful.

While it is not a bad idea to diversify, the simplest and most efficient transfers of ownership will be with businesses that are similar to yours in terms of their business model and ideal clientele. There is no set rule when it comes to this, but you need to ensure that any transition periods are seamless for the existing clients.

Make sure that the book of business is actually worth your time and money before getting too far into the process. Just because you happen to have the energy and financial stability to make such an acquisition, that does not mean you should get ahead of yourself and make a bad deal with the first seller you meet.

As mentioned before, it is critical for you to do your due diligence before any business acquisitions. Learn as much as you can about the business, such as how the seller runs things. Working directly with the selling financial advisors can make all the difference, as they will certainly want their clients to be as happy as possible after the transition.

Likewise, it can be very beneficial to meet with those who may soon be your new clients, if possible. Try and find any pain points that they might have under current management, or if the clients have any succession plan for themselves. Regardless of what the seller may tell you is their reason for leaving the business, it is never a bad idea to get some more information from their clients. If the clients think that the seller is simply trying to jump ship, they will likely show it.

Once the book of business has transferred into your hands, set aside time to check in with your new clients in regular meetings. Avoid communicating with form emails and other cut-and-paste messaging, as this will shake whatever confidence the clients may have. Consistent personal communication is the best investment you can make at this stage. Whatever amount of extra time and work this may cost you is sure to pay off down the line.

Further, inform your acquisition by assessing the overall health of the business. Review tax returns and financials, analyze cash flow and identify the general organization of client data. The due diligence process should encompass a comprehensive evaluation of every facet of the book of business.

Prior to closing on the book of business, it is strongly advised to have a plan in place for transitioning the clientele. Establish a mutually agreed-upon timeline for the seller to support the transition and complete all responsibilities to their customers. The first six to nine months are crucial in executing a smooth changeover strategy in order to retain clients. Remember, these clients can choose to leave and take their businesses elsewhere, so you must establish trust and nurture these new relationships for long-term success.

Live Oak Bank specializes in acquisition financing and our team of lending experts will help you navigate the complexities of buying a book of business and business acquisition. If you'd like to speak to a member of our team about an opportunity, please fill out the form below. For more information about the acquisition process and timeline, download our Guide to Buying a Business.

With a substantial number of advisors heading toward retirement, a younger advisor looking to find a book of business for sale does not have to look too far. But while the process of buying a book of business might seem to be straightforward, it can be fraught with difficulties. Here are some key considerations to keep in mind when going through the process:

Furthermore, the purchase/rental agreement usually has a non-solicitation clause that precludes the purchasing advisor from soliciting the clients if he or she leaves the dealer. So, understand what is actually for sale and what you are buying before you engage in negotiations with the seller.

2. How hard will the transfer be? Remember that clients are not obliged to transfer their business to the purchasing advisor; they can choose any advisor they want. Therefore, you need to know how likely it will be that the clients will choose to transfer to you and how much work it will take to get those clients on board?

Much of that might depend on how involved the selling advisor is in the introduction and promotion of the new advisor. If the selling advisor is in good health and motivated to make this transfer a success, those are usually better circumstances than if the seller is either unwell and thus unable or simply unwilling to be involved in the introductions. (Note: the advisor could have already passed away and the sale of the book of business is by the estate.)

3. What is the quality of the book? Does the purchasing advisor agree with the strategies and approach that the selling advisor has applied to the client accounts? Is the purchasing advisor comfortable that the investments are suitable for each client, for the most part? Also, are the clients quite satisfied with their circumstances?

Insurance agencies are bought and sold every day, but why should they matter to you? Is it ever the right time to purchase a book of business? Think about this: The average agency owner is 56 years old or older, and 20% of those agents are 66 or older. They are at the stage in their life where they are looking to retire, and their biggest asset is more than likely their insurance agency. To retire they need to sell their agency. This is where you step in.

If you are looking to grow your book of business, buy a book. This is a great way to add revenue within the agency and to build bonus income with a carrier. But before you jump on the chance, make sure you can afford it. Do you have a down payment, or will you be financing or buying out right? Make sure that purchasing a book of business aligns with your finances before jumping the gun.

Also, do you have the staff to service the new acquired book? If not, think about the cost associated with payroll. Many acquired agencies have different carriers than what you are appointed with, so make sure you compare the carriers prior to the purchase and state licenses. Some carriers may not give you the appointment and you might need to remarket those accounts. That too requires more staff work to remarket the accounts.

Think about marketing tools required to reach out to the clients. Emails and letters about their current agent retiring, selling the agency, and introducing you are a necessary first step to building a new relationship. Also, you will need to reach out to each client either by personal email or phone call to formally introduce yourself and review their current coverages and needs. Retaining clients is an important part of acquiring a book of business.

The Agent Support Network of America (ASNOA) is a fully integrated service network for independent insurance agents. We offer more than just carrier and market access, we support your entire business with our list of services, which includes accounting, licensing, marketing, training, and ongoing education. Contact us today to see how we can help you grow your agency.

The right business acquisition will put your financial practice in a position to onboard new clients efficiently and effectively. But how do you know if you should buy a book of business: is it the right fit for your customer management style? Will the clients want to stay with your practice? Is your practice ready to intake customers? Are you paying the right price for the book?

Ask yourself if your processes could be extended to new customers as they currently exist. If you would you need to make substantial investments to change your processes for onboarding and managing the new book of business, consider purchasing a more closely aligned practice.

When deciding how much a book of business is worth, appraisers often calculate a purchase price using a standard multiple for the yearly revenue of the book. However, current valuations rely on data from the most recent years. And our most recent years are not necessarily indicators of long-term performance because of outlier behavior and data.

Certain intangible qualities of the book, like client goodwill, are also harder to value. When determining how much you should pay for the book of business based on goodwill, you may want to consider turn over rates, client retention rates, and cross-sell rates (how often did a customer elect for additional services after their base service). These are all statistics that indicate the book of business is full of ideal customers with healthy spending behavior for your practice.

Seller involvement can be a crucial element of client retention during a transition of business ownership. A seller that stays involved after the purchase bolsters the chances that the book retains its purchase price value.

You should account for the benefits of a highly involved seller when determining how much you are willing to pay for a book of business. Though the purchase price will be higher, you may have a much better chance of a higher return on investment than if the seller walked away as soon as you sign the dotted line.


Welcome to the group! You can connect with other members, ge...


Group Page: Groups_SingleGroup
bottom of page