Management adviser and business analyst Max Franchitto has expressed concern about advisers getting their money’s worth when purchasing a ‘buyer of last resort’ (BOLR) portfolio:
“BOLR residual portfolios are they good value?”
I am often asked this question by planners who are considering the purchase of a portfolio that has been sitting a BOLR quarantined environment with a dealer group, and the answer is never a simple one.
Buying a BOLR residual portfolio does have its challenges and they are simply these:
The portfolio is clearly an “orphan” portfolio so client loyalty may be questionable
The portfolio may be fragmented in its demographic and geographic make up
The portfolio may have limited up-sell and cross-sell potential (may be oversold or maybe even undersold?)
The portfolio may be made up of a number of small bundles of clients from a variety of practices
What to look for before agreeing on the purchase of such a portfolio then becomes a matter of detailed due diligence by the purchaser, even if the portfolio is from within their existing AFSL provider.
Then there is the cost factor, because if its value is predicated by the BOLR rate of sale then the negotiability of price may be somewhat limited.
The bottom line is again simple , when considering an ex- BOLR portfolio ask as many questions as you can about its make-up and future potential and conduct your own due diligence….
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