What happens to wealth advisors when P&C brokers buy them out?

Succession planning is a key component of the acquisition strategies employed by P&C brokers buying wealth management, retirement planning and employee benefits advisories.

That said, P&C brokerage buyers aren’t looking for the sellers to leave right away after the sale.

The goal is to find people with runway, said Terri Botosan, regional president of employee benefits and life at Hub International.

The owner of an acquired wealth management advisory could remain with the P&C acquirer for four, seven or 10 years after the sale. Retirement isn’t imminent, said Rob Taylor, executive vice president of retirement at Hub International. He knows this from experience, having sold his firm, TRG Group Benefits & Pensions, to Hub three-and-a-half years ago.

Botosan noted the goal is to offer mentorship opportunities to employees at the acquired firms, allowing them to explore work in other product areas that weren’t available to them before the buyout. “We’re making sure we develop those skillsets and provide for a younger generation,” she said.

After the sale to Hub, Taylor initially figured his runway would be five years. Now, a few years in, he sees his runway extending another six years. “You kind of sell with the idea that my runway was always the same, but I’m having a lot of fun. And the quid pro quo on the Hub side is they’re looking for organizations to buy that have [people with] long runways that want to be around to offer that value to customers,” he said.

What’s more, retaining principals can smooth transitions.

“Many sellers want to stay involved post-sale by assuming leadership positions and maintaining their entrepreneurial spirit,” said Mike Goldman, president and chief operating officer of NFP, which recently acquired Newport Private Wealth. “It makes good business sense for the buyer to enable this and ensure the seller aligns with the company culture and becomes fully integrated across the ecosystem of the firm.”

Which means sellers who want to stay active and help mentor the evolving teams at the acquiring P&C brokerage are welcome, said Navacord executive chairman T. Marshall Sadd. “Sometimes it can be two years, sometimes it can be five years,” he said. “We’re not fussed about it as long as they’re adding value. We’re happy to have them stick around.”

But, in cases where owners do want to leave sooner, Yan Charbonneau, president of insurance industry acquisition firm Synex Business Performance, starts the handoff process early. He’ll have incumbents of the acquired firm bring an advisor who’s taking over a particular file to client meetings and explain there’s been a transaction.

“For some advisors, part of our group, I would say their portfolio is half-full. So, they can take on more in each line of businesses,” he said. “The day we buy, we know that Advisor X comes in with a quarter of his practice in seg funds, and a quarter in life insurance, and a quarter in employee benefits. We split his practice with three individuals that are going to be specialists in each of those areas.”

This creates the option for a seller to stay on for two or three years as a mentor, while acknowledging today’s market may be more complex than when they entered the business.


Feature image by Barraud

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