Twyla Hardham of Safe Harbour Financial Solutions Inc. says quality notes about clients are extremely important in the transition to a new advisor.Ashley Godin/Supplied
In Buy the Book, advisors discuss their experiences acquiring a book of business, from practice valuation to client retention.
Twyla Hardham, 55-year-old owner of Safe Harbour Financial Solutions Inc. in Kelowna, B.C.
Twyla Hardham had not planned on a life in financial services. At 22, she was a single mother, taking whatever roles would keep the lights on and building a career by necessity as much as ambition.
Two decades later, Ms. Hardham is the owner of Safe Harbour Financial Solutions Inc., based in Kelowna, B.C.
“I wanted to be a true independent broker with no restrictions attached,” she says. “I also wanted to build a legacy, something that was bigger than myself.”
Today, her practice focuses largely on segregated funds and insurance. She serves more than 500 clients and employs two licenced associate advisors and two administrative staff.
The book
In 2022, Ms. Hardham’s managing general agency, WealthLINK Financial Services Inc., introduced her to an advisor specializing in financial planning and conservative investment strategies. The agency knew the advisor was considering a sale and saw a potential match. Around the same time, a friend mentioned a potential seller; it turned out to be the same advisor.
The book, with about 320 clients, included many couples in which the women were engaged with their finances. Clients held balanced to conservative portfolios, plus life and living benefits coverage. About 30 per cent were divorced or widowed women in their late 50s. Ms. Hardham, who is divorced herself, felt a connection to that group.
“That actually was what got me in the business, originally,” she says. “I wanted to serve women who were underserved and not empowered to make strong, solid financial decisions.”
The price
Ms. Hardham paid three times recurring revenue, which is above the industry average of 2.5 times. Stock markets fell in the spring and summer of 2022, which reduced the assets tied to the book, but she honoured the negotiated price.
She financed the purchase through Manulife Bank, paying an upfront amount with a 10-per-cent holdback for 18 months. The holdback was used to reimburse her if any clients left during that period.
The seller added a purchase agreement clause that stated if clients withdrew from their investments for “lifestyle” reasons, it didn’t count toward the holdback.
“I didn’t realize what a big deal that was when I bought the business,” she says. “But what defines lifestyle?”
While she says she retained 95 per cent of the new clients, large purchases such as a home or cabin could mean meaningful outflows even when clients stayed with her. She encourages buyers to define key terms in plain language so everyone knows what counts.
Regarding the price structure, Ms. Hardham would have preferred an asset purchase. But the seller chose a share purchase so they could potentially use the lifetime capital gains exemption.
With an asset purchase, all liabilities would have been frozen and remained the seller’s responsibility. With a share purchase, on the other hand, Ms. Hardham assumes all aspects of the business, including lease agreements and contracts, and the risk of any potential liabilities.
“You really have to trust that who you’re purchasing from has really solid business practices,” she says.
In the end, Ms. Hardham went with the seller’s choice as the clients aligned with her values.
The transition
The seller and Ms. Hardham held joint introductory meetings for about a month, then the seller stepped away. The handoff was helped by strong client documentation, including one-page bios that captured investment style, personality notes and key relationships.
For buyers, Ms. Hardham says the quality of client notes matters as much as the transition schedule. Clear documentation makes it easier to serve clients quickly and helps them feel understood from the start.
She also leaned into family planning to deepen relationships. Although account minimums apply, she encouraged aging parents, adult children and other relatives to plan together. Family members were exempt from her minimum, she says.
Advice for buyers
Ms. Hardham urges buyers to study client concentration and loyalty. How many clients are close friends or relatives of the selling advisor? What share of revenue do they represent? While she was able to retain most clients, she says examining the book that way is paramount.
“That is very important as there could be a major flight risk,” she says.
If possible, she recommends observing the seller’s process before closing.
“Watch how they do the reviews, how they onboard a client. Watch their processes so it’s more fluid when the transition period comes,” she says.
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.