Tied up running your firm? Could be time to sell

Adviser Michael Duncan says the market upheaval of the past two years has taught him a surprising lesson: he didn’t like being an owner.
Mr. Duncan says he got tired of watching assets fall while his costs remained fixed. And he hated having to lay off an employee.
“Things were just going crazy,” he recalls. “I was spending all of my time running the business.”
For Mr. Duncan, the solution was obvious. In February, he sold his firm, DFG Advisors Inc. of Ridgewood, N.J., to a roll-up firm, United Capital Financial Partners Inc. of Newport Beach, Calif. United Capital has acquired close to two dozen advisory firms since its launch in 2005.
Mr. Duncan declined to go into detail about the deal, but said he took stock rather than cash for his interest in the firm, which had $175 million in assets.
The decision to sell to United Capital was a huge relief for Mr. Duncan. He said he can now spend more time with his clients since United Capital oversees the back-end operations. He doesn’t have to pay bills anymore or worry about training employees.
What’s more, United Capital deploys a client relationship management program that enables advisers to create financial plans for clients. When he was on his own, the simple process of creating a financial plan for each client often took him several hours. Now, he reviews each plan in about 15 minutes.
Still, Mr. Duncan concedes that selling his firm meant giving up a lot of control. “I’ve been on my own forever,” said Mr. Duncan, who has been in the industry for 22 years.
But Joe Duran, chief executive of United Capital, which has $11 billion in client assets under administration, said the firm is only interested in acquisitions where the advisers want to stay on to run their firms. Indeed, of the 23 firms acquired by United Capital, 22 of those advisers have remained in their offices.
Mr. Duran said he was impressed with a board game Mr. Duncan uses to help married couples prioritize their financial goals. In the game, Mr. Duncan shows clients pre-printed cards that list goals such as “retire at age 60” or “buy a second house” — typical goals for couples.
He then hands them his business cards and asks them to write their own personal goals on the back of each business card. Clients place these cards on a board which is divided into two categories: “now” and “later.”

While there are no winners or losers in the game, Mr. Duncan said the exercise helps him get a firm grasp of a couple’s financial goals — and lets the couple see if their goals actually match up. He then uses the game to help craft a financial plan for the couple.
“When I saw that,” Mr. Duran said, “I knew he was a forward-thinking guy.”
Shop Talk is a regular column detailing how financial advisers run their businesses. The column focuses on unusual or innovative ways to attract more clients. Suggestions or tips for Shop Talk? E-mail Lisa Shidler at [email protected] or visit the Shop Talk page at InvestmentNews/shoptalk