How to Sell Your Book of Business

As insurance and investment advisors reach retirement age, they start thinking about divesting their books of business and selling it to the next advisor who can manage the needs of their various clients. However, there are a few things every advisor should know going in when they’re about to take the plunge and sell their book.

Do you want to actively market yourself? This is the first question advisors and financial planners need to ask themselves, according to Cameron D. Jacox and James E.C. Hilton, managing partners of Jacox-Hilton Producer Consulting, a Toronto- and Boston-based firm that helps insurance advisors and financial planners value their books of business and match buyers with sellers.

“Some advisors may want to do things privately because they don’t want their clients to know that they are retiring,” says Jacox. “There are different channels for finding a buyer, such as of online networks, conferences and coming to us to match you up with one of our buyers or sellers who would be interested in your book or selling a book.”

There are a lot of informal selling options, including LinkedIn, which supports buy/sell book groups and financial practice groups. You can also go to your MGA or your insurance carrier and tell them of your plans, and they will generally know who is out there looking to buy or they may buy your book off of you themselves.

“Industry events and conferences are also excellent for networking, and I’ve seen conversations emerge that revolve around buying or selling a book on numerous occasions,” says Hilton.

What Level of Care Do You Want that Buyer to Take? This question comes down to whether you want a very active buyer managing the needs of your former clients or you’re looking for a more passive approach.

Then it’s Time for the Valuation Process. Buyers go through the valuation process to find out if the book they’re purchasing is a good investment, but sellers also need to find out what their book is worth and whether it’s worth selling in the first place. “You need to find out if the trailers are sufficient; there is really no need to sell if you can’t get the right price,” continues Jacox. “What we see today is there are a lot of buyers who are unwilling to pay the right price and sellers who are unwilling to sell at ‘market’ prices. So what we have is a largely frozen market of people who can’t come to terms.”

“In our valuations we are very honest about potential profitability, approaching it through in-force analysis, and this usually ends up in the seller’s favour, but only when the valuations start to get higher, more honest and complex will we see large movement in the market.”

Consider Transition Planning. Once you’ve gone to the market and found your buyer, it’s time to start planning for the transition. “That would involve legal help drafting a contract, whether it’s going to be in the future or more immediate, how long you will stay on after the transition is completed to help with it and what kind of outreach you’d have with your clients to make sure they feel like they’re being left in good hands,” says Jacox, who also says you must ensure the book is sustainable for your buyer in the long term.

“One of the key issues when transitioning a book is knowing what the attrition level will be — as in how many clients will stick around after the transition is finished? One of the difficult things we see with smaller brokerages is that the broker markets himself as an individual,” says Hilton. “When that book gets sold, and a new advisor comes into the picture, there needs to be a smooth transition and the explanation needs to be really clear as to why that new advisor is in the picture. You can do that more smoothly if you shed it in a positive light, which will potentially result in a lower rate of attrition, along with making an effort to more broadly brand your practice before the transition.”

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  • Cameron Jacox
    July 3, 2012 at 1:04 pm

    If policyholder attrition is a concern, then protection against a level of attrition that you consider egregious can be included in the agreement. For example, if you structure the agreement such that you pay 50% now and 10% each year for 5 years, you could also include a clause for reducing the back-end payments if policyholders start leaving in droves. That being said, *historical* attrition and a full analysis of the policies in the book will tell you what is likely to happen, e.g. if the book has been ‘churned’. From there, the attrition is up to you to manage based on the quality of relationships that you establish post the transfer.

  • Gerry Dreger
    July 3, 2012 at 1:00 pm

    What I would like to know is, how is a purchaser protected from loss of business / clients from date of purchase.

    Specically, how is payment for the purchase of a practice usually structured on a percenatge of payout and time frame basis to protect the purchaser.


  • Cameron Jacox
    May 8, 2012 at 5:41 am

    Hi RT- if I understand you correctly, your income comes from commissions as opposed to having trailers and renewals? If so, then your purchaser would have to know whether he will have the trailers and renewals transferred to his ownership. Who currently owns them? And Secondly, it would be necessary, as always, to value your future new business cash flows based on the amount of inforce opportunity within your book, your persistency, etc.

  • RT
    May 4, 2012 at 12:26 am

    how you determine the price of book of business if income yearly commission?

  • Cameron Jacox
    February 16, 2012 at 1:56 pm

    Hi again Bruno, I want to add that in selling or buying a book of business, there are a lot of accepted formulas that form the basis of many valuations, but there’s the all important qualitative side of a book that really makes the difference.- Cam

  • Cameron Jacox
    February 15, 2012 at 10:52 pm

    Hi Bruno,
    Industry rules of thumb, and experience, tell us that attrition of 5% of the clients can be assumed. That being said, we’ve seen 1% and we’ve seen 15%. Assuming the Advisor maintained good relationships and the transition is handled properly, it can and should be kept around 5%. From the client’s point of view, they want to know they’re not being “passed off” to someone; they want a feeling of control; so meetings should be conducted with every client on the book, and with the selling advisor, within 2 months of purchase, or optimally before purchase.
    If you have additional questions please feel free to email me:

  • Bruno Hintz
    February 15, 2012 at 6:07 pm

    I was wondering if there is a “rule of thumb” range of “attrition” (for investment advisor booke of business) or whether it varies widely?

    Is there an accepted formula for valuing this type of book of business? ie: 1%, 2% etc. of total client portfolio value?