How to buy a colleague’s book

How she got started

Kristi Ames says she was destined to become an advisor. “I was thirteen when my mom started in the business, so there were always discussions about what clients go through.”

So, after completing her business degree in 2005, she got her mutual fund and insurance licenses in 2006 and 2007, respectively. She was an assistant for nearly three years, during which she was salaried. She got her CFP in 2009.

Ames knew building her book wouldn’t be easy, but her mom encouraged her. “She said she’d had to do pro-bono work and put in extra hours to build her book, but that it was worth it. She said I may not do well financially in my first few years, but that every client I gained would add to my base,” Ames says.

Today, Ames manages 75 households, mostly families with young children, that earn upwards of $100,000.

Overcoming her challenge

The advisor

Kristi Ames, CFP, Worldsource Financial Management in Calgary, Alta.

She’s been an advisor for seven years, and is insurance and mutual fund licensed. She’s taking the Elder Planning Course.

The challenge

Taking over a colleague’s book.

In 2009, a retiring colleague offered to split his $4-million book between Ames and another advisor for a lump sum. She went from serving 10 to 40 households, and her new clients earned an average of $50,000 per year at that time.

She spent several months with the departing advisor, learning about his clients. But when he moved to Costa Rica, she was on her own. “When buying a book, you get insight on the number of clients, and on their ages and portfolios,” she says. “But you don’t often get to know their histories and personalities before working with them.”

Ames leaned on other colleagues for relationship-building tips, and on her assistant for scheduling help. And while it was challenging to make time for both existing and new clients, Ames still spent about two hours with her new clients on discovery meetings. And she was able to do it because she offered evening appointments and house calls. It was important, she adds, not to delay or reschedule appointments while gaining new clients’ confidence. “I met with all new clients within six months of buying [my colleague’s] book, and I repapered and revamped many of those clients’ portfolios.”

That dedicated extra time helped smooth the transition for new clients who weren’t happy. For one couple, Ames was their fourth advisor in 10 years because their past advisors had either sold their books or retired. “They never knew how long the relationships were going to last, and were wary of starting all over again. I didn’t know they’d been through so much.”

Since they seemed skeptical, she made a house call to answer their questions about the industry, and to explain her process. It turned out the couple had been contributing to their RRSPs for years without understanding the funds they were in, or what returns they should expect. So, she explained their investments using fund facts and visual aids, such as graphs.

And, when Ames learned they owned a corporation with excess cash they could invest, she helped them focus on retirement planning, rather than on current market returns.

Her approach paid off. It took two years for them to feel comfortable, she says, but “at a recent meeting, the wife told me, ‘It took us a few years to find you, but we’re so happy.’ ”

What she learned

Taking on clients slowly makes it harder to generate adequate cashflow when you’re a new advisor. So, find a mentor you can learn from, and he’ll likely pass on clients.

During the book transition process, says Ames, “some clients were unsure because I was young [27 at the time]. Plus, if people have had advisors who haven’t followed through, you need to prove yourself and dedicate extra time to getting to know them.”

She also learned it’s best to buy a book from someone you know. That way, you can be more frank with that person if you have concerns with how he or she is managing the practice. “And even when two advisors have an agreement, there’s the risk the departing advisor won’t hold up his end of the bargain. You then have to do more damage control and […] clients could choose to leave.” So, spend at least six months with that advisor getting to know his clients.

Katie Keir is content editor of Advisor Group.