This broker experienced big dramas with her new client book. Her thoughts on how the process could be improved are fascinating.
Mortgage broker and financial planner Sue Warren from Topline Enterprises has experienced some serious dramas with her new client book. She tells MPA how she would have done things differently.
It all started a couple of years ago when she bought what she describes as “quite a large business” from a financial adviser who was getting out of the business.
With this adviser exiting the industry, Warren saw the opportunity to take on a new book of clients who would otherwise be without an adviser, but things didn’t’ exactly pan out as planned.
“He's obviously jumped back into the business and started contacting the top 20% of my clients,” she explains. “We've started legal action.”
“He says that he has a personal relationship with all of them and he's quite within his rights to keep that relationship going.”
As part of her due diligence Warren says that she made sure that there was a non-compete clause in place with the adviser from whom she was buying the client book. But, she believes that there are measures that she could have taken to improve her situation.
“My point is making sure the agreement's airtight. And if there is a personal relationship then it has to be spelled out in the agreement,” she says. “There are lots of pitfalls about buying a business, as we all know. It's still an ongoing traumatic experience.”
Warren went on to put together a presentation on the client book buying experience, which she carried out at a recent conference in Shanghai. And, with the benefit of hindsight, she’s able to offer advice to brokers or advisers who are thinking about buying a book themselves.
“Obviously when you're buying a business clients can feel really quite upset by it – they feel as if they've just been sold to the highest bidder. They can get extremely upset by that, but it depends on how you handle the transfer of that business or those relationships,” she says.
She suggests that making the most of today’s rich multimedia environment online could help to ease the transition. A video from the clients’ existing adviser or broker explaining why they’re selling the business and what their successor brings to the table is one option.
“I think it would lessen the fallout after the transaction's happened,” says Warren.
“So there are lots of different things that you can put in place to protect what you're purchasing. And it works both ways, in a mortgage business or financial planning business,” she adds. “There are things I would have done differently. I think I would have changed my agreement a bit, no doubt about that.”
In terms of the handover process, Warren explains that she and the exiting adviser did the usual letters, emails and setting up reviews – with mixed results.
“Doing joint meetings, some of them were ok, others didn't work all that well – but you expect that,” she says. “But I think, a lot of the time, the clients, if they could sit back and just see something from afar such as a Youtube video it just breaks the ice and explains both sides. And that's less intimidating for them and doesn't put them on the spot so much.”
She adds that she would definitely go for this softer approach if she did it all again, as the clients in this scenario had no idea that the changeover was going to happen.
“They saw him one week, and the next week he's gone. I think that was what upset them so much, but I had no control over that,” she says. “So people can be primed up: 'I'm getting out of the business', 'these are the reasons why', 'I've found the best person to come in and handle it all'. That was never really done.”
All in all, she believes that standing up, sharing experiences and talking about these issues can only be good for the industry. Especially given that her story appears to be one that resonates with many financial services professionals.
“At the end of the presentation a lot of people came up and said 'that happened to me, what are you doing?',” she says.
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