Tami Romanchuk, certified financial planner and insurance specialist at Excalibur Executive Planning.Chris TT Thombs/Supplied
In Buy the Book, advisors discuss their experiences acquiring a book of business, from practice valuation to client retention.
Tami Romanchuk, a 45-year-old certified financial planner and insurance specialist at Excalibur Executive Planning in Shawnigan Lake, B.C.
Tami Romanchuk worked as an independent insurance broker for much of her career. In 2014, she left the advice world to work as a sales director for Manulife Financial Corp., supporting 1,400 advisors in northern Alberta after her mentor asked her to work with him.
She stayed there until late 2016, when an opportunity to take over for an advisor on Vancouver Island cropped up.
The book
The seller was in his 70s and retiring. Although he wanted a local advisor, Ms. Romanchuk had ties to the island through her long-term partner. She flew to the island, meeting the seller and his wife. After one week of getting to know each other, she says a remarkable thing occurred.
“They were leaving for an extended snowbird trip to Mexico and asked me to house-sit and continue operating the business from their home office while we finalized the transition,” she says. “That level of trust was incredibly meaningful and honestly cemented the decision for me.”
After that, she commuted back and forth to the island from Edmonton for a few months, before moving there permanently in April, 2017.
The book, however, was not free of issues. The seller had around 1,500 policyholders but was only proactive in cases of policy renewals and registered retirement income fund conversions. Ninety per cent of the business was through one carrier, with 27 different legacy products. Over the years, the seller had inherited clients through advisors who retired or passed away.
“Many of [the clients] had not been contacted in years,” she says. “I had to learn about the guarantees and features of what each version meant. It was a nightmare.”
The clients, strictly insurance-based, held segregated funds as investments, but no mutual funds, exchange-traded funds or securities. She also didn’t find any written financial plans.
Still, she saw the opportunity to start anew with the clients.
The purchase
Ms. Romanchuk paid one-time the annual renewal earning, which she says is well below the industry average for an insurance book.
She says books with a clean, documented client list and strong business often fetch more than double that price. In her case, the fact that the seller wasn’t serving clients in the book actively affected the valuation.
“There really wasn’t much negotiation and we both knew the number made sense,” she says.
She paid the seller cash up front. Her insurance carrier provided some financing and she used her personal line of credit to fund the other portion over five years.
The transition
Ms. Romanchuk calls her deal the non-transition. The seller retired immediately, she embraced the island’s lifestyle, put her head down and got to work.
As many clients had been ignored for years, they were thrilled to hear from her. Others were confused about who she was. She made the mistake of sending out all 1,500 notification letters at the same time. Within a matter of days, clients flooded her e-mail and phone.
“I would go from one line to the next. People did want to meet because they hadn’t talked to somebody in so long.”
She hired administrative staff to assist with changes and updates – everything from incorrect spellings of a client’s name to updating and adding contingent beneficiaries on policies.
Ms. Romanchuk would remind clients in her annual review letters to tell her and the team of any major life changes and to review their beneficiaries.
“We really tightened the ship and changed our processes,” she says.
She also hired a financial planner.
Things were going well, until she experienced vertigo that wouldn’t go away in 2022. She also had hearing loss and a slight droop in her mouth.
She was diagnosed with meningioma, a non-terminal, benign brain tumour. In the spring of 2023, she needed to undergo a craniotomy, a 15-hour invasive surgery. Her daughter had just turned one.
She decided she couldn’t keep the majority of the clients she had acquired. Before the surgery, she transitioned about 70 per cent of clients to another advisor, keeping around 150 clients who focused on financial planning.
“I had to come up with Plan B just in case the surgery didn’t go so well,” she says.
Although she made it through the surgery, she transitioned the rest of her book to a local financial planner in Vancouver Island. She says it was the right move as she wanted to focus on recovery and her young family.
Ms. Romanchuk now works remotely from Shawnigan Lake. She is part of Jason Desaulniers’s team at Excalibur Executive Planning in Edmonton. Mr. Desaulniers is a friend and she works solely as an insurance specialist.
“I’ve taken a step back from writing financial plans and just focus and talk insurance to everybody,” says Ms. Romanchuk, who has her certified financial planner and chartered life underwriter designations. She also co-authored a book on succession planning for insurance professionals.
Advice for buyers
Ms. Romanchuk says advisors buying a book should do more due diligence to understand the type of business in the book. And in hindsight, she does not recommend an upfront cash purchase.
“Retention risk needs to be part of any purchase,” she says. While Ms. Romanchuk maintained the majority of the clients, she says a few accounts did move on.
“A more prudent approach is often a staged payout with a portion paid upfront, another portion after [meeting] year-one retention targets and the balance after year two.”
Transition periods in which clients are introduced to the new advisor are also paramount, she adds.
Are you a financial advisor or financial planner who recently bought a book of business? Globe Advisor would love to speak with you about your experience. Candour, especially around the finances, is appreciated, and your name and photo will be used for the column. Please e-mail dgage@globeandmail.com and include a brief synopsis of your situation.