What Is Your Advisory Practice Really Worth?

The perils of the valuation gap.

Feb. 25, 2013John Furey and Matt Cooper

Recently an advisor was interested in selling his practice that he had built over the past several years. He was 69 years of age and wanted to be completely done working in the business within a year of closing the deal with his “ideal” buyer. The practice was a 100 percent fee-only business on about $125 million in assets, an attractive attribute. The practice was generating approximately $1 million in gross revenues and the advisor/owner was taking home about $550,000 each year in income. This certainly seems like a well-run business and a desirable acquisition candidate on the surface. When asked what he thought the practice was worth, the advisor responded, “about $2.2 million.” When asked how he came up with that number, he said, “It was fairly simple—2.2 times revenue and/or four times earnings.”

More: What Is Your Advisory Practice Really Worth? | Practice Management content from WealthManagement.com.

RIAs Overwhelmingly Optimistic for 2013 GrowthTDAI finds advisors ready to plan, implement strategic initiatives and technology investments0BY JOHN SULLIVAN, ADVISORONEMarch 11, 2013 • ReprintsForget the Dow. The greatest measure of growth might come from advisors themselves.TD Ameritrade surveyed 502 RIAs on everything from top initiatives to their investment in technology to how theyre attracting new clients.The clearing and custodial giant found that advisory firms are gearing up for growth in 2013. The company’s Institutional Advisor Index survey says that 97% of respondents report their total number of clients increased or remained steady over the past six months. Nearly nine in 10 RIAs expect a faster asset under management AUM growth rate this year.

For More: RIAs Overwhelmingly Optimistic for 2013 Growth.

In June 2011, financial advisor Jeff Leventhal went to Chicago for a home office visit with HighTower Advisors executives at the firms headquarters. Leventhal was pondering a move from the wirehouse where he worked to a more entrepreneurial practice, but he thought any action was a few years off.Instead, Leventhal brought his team of five to HighTower in Bethesda, Md., within three months. “The home-office visit was the number one thing that solidified my decision,” he says. Leventhal started his career in Merrill Lynchs training program in 1995 and stayed at the firm until 2003, when he moved to UBS. As he learned more about the industry beyond the wirehouses, Leventhal started to wonder whether he was in the best place to serve his clients. The meltdown of 2008 brought this idea into stark relief. Leventhal no longer wanted to be at a firm attached to an investment bank, and he found the fiduciary standard attractive.Leventhals advisor team was one of eight that HighTower brought on in 2011, and in 2012 there were nine more teams. This year, HighTower expects to add even more advisors.

More : HighTower Aims to Lure Top Names with Home Office Visit | On Wall Street.

.P. Morgan Securities has bolstered its West coast presence with the inauguration of its 20th office in Seattle, Washington.

After adding three advisors to its East coast operations earlier this year, the New York-based boutique wealth management firm said it was continuing to eye opportunities for growth in “key markets.”

“We continue to see exciting opportunities in key markets like Seattle,” Greg Quental, chief executive officer of J.P. Morgan Securities, said in a statement. “We have a strong team in place and look forward to introducing our deep expertise, broad product offering and boutique experience to Seattle area clients.”

More : J.P. Morgan Securities Opens 20th Office | On Wall Street.

Morgan Stanley Wealth Management has snapped up a three-member team from Merrill Lynch with $1.3 million in production in the firm’s latest acquisition in its hunt for new advisory talent.The team includes Nikesh Kadakia, Joseph Pastore and Kirk Snyder, who moved to Morgan Stanley in El Segundo, Calif., on Feb. 15, according to their public registration records with the Financial Industry Regulatory Authority. Kadakia had been registered with Merrill Lynch for about 13 years, FINRA registration records show, while Pastore had been with the firm for more than 10 years and Snyder served at Merrill Lynch for about three years. The team reports to branch manager David Fahey.

More Info: Morgan Stanley Nabs Three-Advisor Team From Merrill | On Wall Street.

Feb 19 (Reuters) – Top U.S. brokerage Morgan Stanley Wealth Management said on Tuesday it hired a veteran team of advisers in California from rival Merrill Lynch.

Advisers Nikesh Kadakia, Joseph Pastore and Kirk Snyder moved to Morgan Stanley’s El Segundo operation on Friday from Merrill, the brokerage owned by Bank of America Corp. They had an annual revenue production of nearly $1.3 million.

Kadakia and Pastore had been at their old firm for more than a decade. The advisers moved just up the street on Rosecrans Avenue from their old Merrill office to Morgan Stanley’s Manhattan Beach branch, where David Fahey is branch manager.

More Info: ON THE MOVE-Morgan Stanley hires adviser team from Merrill Lynch | Reuters.

HighTower has established itself in the Philadelphia market with the addition of a former Merrill Lynch team with $650 million in assets.

The Sarian Group is the ninth large team the Chicago-based firm has added in the past year and the 36th since its founding in 2008. The two advisors who comprise the group, Gregory C. Sarian and Francis X. Masse II, have 35 years of combined experience and join the firm as partners and managing directors.

According to HighTower’s executive vice president of business development, Mike Papedis, the firm’s advisor-owned was one of the factors in the group’s decision to move.

More info: HighTower Opens First Philadelphia Office With Former Merrill Team | On Wall Street.

Barclays Grabs 16 Advisors

Barclays announced last week that it has hired 16 advisors, or investment representatives for its Wealth and Investment Management division, in seven of its offices across the United States.

“We are pleased to welcome these talented individuals to Barclays,” said Mitch Cox, head of wealth management for Barclays, in a press release. “These hires underscore our commitment to attracting top-performing professionals who seek Barclays’ unique, in-depth approach, of guiding clients to customized solutions that extend far beyond their investment portfolio.”

The newly recruited reps by location are:

In New York, Ramon Hache, Stephen Brazell and Joseph Chung and Steven Guggenheimer moved to Barclays from Deutshe Bank, while Steven Guggenheimer and George Zaki came over from Bank of America-Merrill Lynch. Also coming to Barclays in New York are Jonathan Mann, previously with AllianceBernstein.

In Houston, Don Childress came to Barclays from Goldman Sachs, along with Jeff Collins and Neil Stone.

In Beverly Hills, Calif., Watt Webb was recruited by Barclays from Bank of New York Mellon and Warren Cohn from Bank of America-U.S. Trust. In addition, Adams Morgens joined the Barclays’ Los Angeles office from UnionBanc.

In Boston, Barry Pederson came over to Barclays from Morgan Keegan. Pederson joined the brokerage business in 1993 after 12 seasons with the National Hockey League.

In Chicago, Adam Strauss moved to Barclays from Goldman Sachs.

In Miami, Ileana Platt and Rafael Urquidi joined the wealth group from Credit Suisse.

More Info: Barclays, Morgan Stanley, Raymond James Grab Reps From Rivals.