How to Successfully Inquire on the Open Market

It is without a doubt a “seller’s market” when it comes to financial advisory practices. With an average buyer-to-seller ratio of 85:1, sellers can be picky. Given the sheer volume of qualified buyers that send in inquiries for practices listed by FP Transitions on our open-market system, it is extremely important for potential buyers to put their best foot forward and show the seller why they are the “cream of the crop.”  

Remember, your inquiry is the first communication you will have with the seller, who likely knows nothing about you. While we don’t recommend drafting a novel, your inquiry should at a minimum tell the seller enough detail to pique the seller’s interest. Inquiries that merely state, “I have cash,” “Let’s talk,” “I need more information,” or “See our website for more information,” are usually immediately stricken by the selling party from consideration, regardless of how well qualified the inquirer may actually be. This is because experienced and successful buyers take the time to make a strong first impression.

Remember, the inquiry process is not much different than applying for a job. If you respond to a job posting with “Call me,” “Let’s grab coffee and chat,” or “Let’s talk, I think I would be a good fit,” you are likely not going to make it past the gatekeepers. As anyone who has ever been out in the job market knows, you must sell yourself without overselling. The same principles apply when inquiring about a financial practice for sale. 

While certainly not an exhaustive list, some of the specific items that you should consider including in your inquiry are:

• Your investment philosophy and guiding principles;
• How you intend to care for the seller’s clients long term (e.g., two CFPs in their 40s on staff);
• Why you think the seller’s practice would be a good fit with your current practice;
• Your long-term expansion plans;
• Your education, credentials, and regulatory structure (most sellers like to sell to buyers who are larger in size, but with a very similar client base);
• Whether you have previously acquired a practice and, if so, the success of that acquisition (e.g., 97% client retention rate); and
• Address the specific criteria outlined in the seller’s listing that the seller is seeking from a buyer.

Attention to Detail is Key

It is very important that a potential buyer complete the listing inquiry form with accurate and complete information. Don’t forget to check spelling; we’ve seen many well qualified buyers excluded from consideration because of their failure to proofread their submission. Attention to detail in this highly-regulated industry is important, and failure to accurately and properly complete the form will likely be a red flag to the seller—or, even worse, give them the impression that you’re not very detail-oriented, which is a virtue most senior financial advisors feel is very important.

Given the 85:1 buyer-to-seller ratio, it is important not to get discouraged or give up if you are not selected on your first or even tenth time up to bat. Again, sellers are looking for the perfect fit and you never know when you may hit a home run.

“The Biggest Mistake”

While it may seem obvious to most, when pursuing a practice for sale on the open market please do not attempt to contact a seller directly. While we understand it is a competitive market for buyers, emailing, calling, or otherwise attempting to communicate with the seller outside of the FP Transitions process is often unwanted and viewed as overzealous. Moreover, it can breach confidentiality, which is critically important to sellers. Additionally, the seller may have not yet informed their staff that they are selling their practice and certainly don’t want them to find out from a potential buyer.

Remember, the listings process is not first-come, first-served and there is no prize for being the first inquiry received when a new practice is listed on FP Transitions’ Open Market. Take your time and put some thought into your inquiry; it will pay off.