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Market crisis stalls sales

By Donna Glasgow | March 17 2010 02:40PM








Sales of financial advisory practices have stalled since the market crisis of 2008, according to Cindy Jenner Cowan, Director, Training at Worldsource Financial Management

“The trend since the market declined is that many advisors have decided not to sell. We saw many deals get shelved. The values of practices have declined so much that the advisors are concentrating on building back the value of their businesses.”

Jeff Botosan, Executive Vice President, Chief Operating Officer with Hub Financial, has also seen sales stall “because no one wants to sell at depressed values.” Investment advisors’ assets under management have recovered somewhat, but they are still well below pre-crisis values, he adds.

“An advisor who was about to sell in August 2008 saw the value of his or her book of business drop 30 to 40%. That’s a lot of value.” Although the situation has improved, “they’re definitely still feeling some pain.”

What can advisors who are holding off on a sale do in the meantime? Mr. Botosan suggests they spend time ensuring that information is well prepared for the buyer. This includes remittances, tax returns, notes of conversations with clients, etc. Making sure compliance issues are in order is key. “I don’t think any advisor wants to buy problems.”

Ms. Jenner Cowan suggests advisors look over the entire management of the business to see how they can make the business more efficient.

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