Ep 008: Maximizing The Valuation Of A Financial Advisor’s Book, Practice, Or Business, with David Grau
Financial Advisor Success
Michael Kitces
4.8 • 696 Ratings
🗓️ 21 February 2017
⏱️ 85 minutes
🧾️ Download transcript
Summary
David Grau Sr. talks about how he helped start a business at the wholly unique intersection of financial services, technology, and consulting that is FP Transitions’ bread and butter.
We also discuss the four sectors that David and his team break the industry into - books, practices, businesses, and firms - and the critical differences between them. David also shares his potentially controversial (or at least counterintuitive) perspective on compensation, which by now is an industry standard. (We’d love to hear your thoughts on this!)
Get the full show notes and transcript for this episode at: https://www.kitces.com/8
Transcript
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| 0:00.0 | Welcome to the Financial Advisor Success Podcast, where you go behind the scenes with financial planner, |
| 0:08.4 | speaker and consultant Michael Kitsis to hear stories of how leading financial advisors |
| 0:13.6 | navigated the inevitable challenges that arise on the path to success and get insight from leading |
| 0:19.2 | industry consultants about how to break through to the |
| 0:22.0 | next level in your advisory business. And now here's your host, Michael Kitsis. Welcome, everyone. |
| 0:29.6 | Welcome to the eighth episode of the Financial Advisor Success podcast. My guest on today's podcast is |
| 0:35.3 | David Grau. David is the founder of FP Transitions, the leading marketplace for |
| 0:39.5 | financial advisors looking to buy or sell financial advisory firms, in addition to a consultant on |
| 0:44.4 | advisor mergers and acquisitions, succession planning, and valuations. In this episode, David shares |
| 0:50.2 | his perspective on the four types of financial advisors, books, practices, businesses, and firms. |
| 0:56.2 | Advisory firm valuation trends, given that FP transitions has done almost 9,000 valuations and |
| 1:01.4 | facilitated over 1,500 purchase and sale transactions. |
| 1:05.4 | Why a multiple of revenue sort of rule of thumb for valuation is actually a reasonable way to |
| 1:10.7 | value a book, but a reasonable way to value a book, |
| 1:11.5 | but a problematic way to value a practice or a business. And why paying revenue-based |
| 1:16.3 | compensation to the advisors in your firm ultimately destroys your ability to create enterprise |
| 1:21.8 | value as a business. We also talk quite a bit about David's two books, Succession Planning for |
| 1:26.7 | Financial Advisors and Buying Selling and Valuing Financial Practices, both of which I've read in We also talked quite a bit about David's two books, succession planning for financial advisors |
| 1:27.5 | and buying, selling and valuing financial practices, both of which I've read and highly recommend. |
| 1:32.8 | And you can find directly from our show notes for this eighth episode at kitsis.com slash eight. |
| 1:39.0 | Be certain to listen to the end as well, where David discusses the problem with relying on your |
| 1:42.8 | custodian or broker-dealer platform to find a seller for your business and why you should be especially cautious about |
... |
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