Forget about trail books. It’s selling an integrated business which drives a higher multiple, says Ballast's Frank Paratore.
Embrace an integration of financial services or risk losing clients to a brokerage that does, says Frank Paratore, CEO of Ballast.
Furthermore, this business structure comes in handy when the broker has eventually decided to sell, he says.
“You’ll hear about brokers looking to sell and all they want to do is sell their trail book,” says Paratore.
Brokers should consider selling a business which drives a higher multiple, rather than a trail book that’s going to get scrutinised at one or one and a half times, he says.
Getting sticky customers
Paratore believes that the more integrated the financial services offering is, the sticker your customer. This means they are less likely to leave which is a similar model to what the banks have, and therefore the whole proposition is significantly enhanced.
“It’s more about the relationship, not the transaction, and it’s also about the life cycle of the customer,” Paratore says.
The key is to get a customer who keeps coming back, in order to differentiate your business and protect the longevity of your income, he adds.
“Then you can take it completely to the next level and balance this actually as a business with multiple staff, multiple admin people, multiple this, multiple that, and then you can actually sell it as a going concern,” says Paratore.
“This will sell your business as a multiple of your bottom line profit which generally you could be talking four, five, six, seven times, as opposed to one and a half or two times.”
Why the market hasn’t embraced integration of financial services
There are two key reasons why much of the market is not implementing an integration of financial services, says Paratore.
“For starters, they have not got the mindset so they need to change their mindset, and the other thing is it’s not embedded into their process, so if it’s not embedded into their process then you don’t know what you don’t know,” he adds.
Brokers should have more education as to how the change comes about, how it can work and how they can benefit, Paratore says.
Has your brokerage embraced an integration of financial services? Share your thoughts below.
Furthermore, this business structure comes in handy when the broker has eventually decided to sell, he says.
“You’ll hear about brokers looking to sell and all they want to do is sell their trail book,” says Paratore.
Brokers should consider selling a business which drives a higher multiple, rather than a trail book that’s going to get scrutinised at one or one and a half times, he says.
Getting sticky customers
Paratore believes that the more integrated the financial services offering is, the sticker your customer. This means they are less likely to leave which is a similar model to what the banks have, and therefore the whole proposition is significantly enhanced.
“It’s more about the relationship, not the transaction, and it’s also about the life cycle of the customer,” Paratore says.
The key is to get a customer who keeps coming back, in order to differentiate your business and protect the longevity of your income, he adds.
“Then you can take it completely to the next level and balance this actually as a business with multiple staff, multiple admin people, multiple this, multiple that, and then you can actually sell it as a going concern,” says Paratore.
“This will sell your business as a multiple of your bottom line profit which generally you could be talking four, five, six, seven times, as opposed to one and a half or two times.”
Why the market hasn’t embraced integration of financial services
There are two key reasons why much of the market is not implementing an integration of financial services, says Paratore.
“For starters, they have not got the mindset so they need to change their mindset, and the other thing is it’s not embedded into their process, so if it’s not embedded into their process then you don’t know what you don’t know,” he adds.
Brokers should have more education as to how the change comes about, how it can work and how they can benefit, Paratore says.
Has your brokerage embraced an integration of financial services? Share your thoughts below.
