Anthony Rasotto, founder of ARC Wealth in Vancouver, has built his practice around
HENRYs (high earners, not rich yet).Michael Gladkey/Supplied
In Buy the Book, advisors discuss their experiences acquiring a book of business, from practice valuation to client retention.
Anthony Rasotto, 36-year-old founder and chief executive officer of ARC Wealth at Quadras Investment Services Ltd. in Vancouver
As a millennial, Anthony Rasotto noticed a demographic that wasn’t being served by the financial industry – HENRYs (high earners, not rich yet). He personally related to a lifestyle of high fixed expenses, such as choosing to rent instead of buying a home, and strove to serve like-minded clients.
“What I enjoy most is giving high-earning clients the opportunity to live life as they want and not stress about their day-to-day finances, knowing that they have a plan in place,” Mr. Rasotto says.
He earned an economics degree from the University of British Columbia while playing for the school’s football team. After graduation, he coached high school football, but didn’t see teaching as a long-term career. A former UBC coach worked in financial services, and Mr. Rasotto decided to give it a try.
He started with Freedom 55 Financial, getting his insurance and mutual fund licences, before starting his own independent firm in 2021. ARC Wealth now has more than 500 clients.
The book
In 2023, Vancouver hosted the Laver Cup tennis tournament. Mr. Rasotto’s dealer invited him, knowing he was an avid tennis fan and player. He sat beside another advisor he’d only had brief interactions with previously, and they hit it off.
They got each other’s contact information and arranged to play tennis every other month. During those games, Mr. Rasotto learned about the advisor’s intent to scale back his practice to free up more time for himself. He aimed to sell a portion of his book. Like Mr. Rasotto, the seller practised holistic financial planning focused on helping clients achieve their goals.
“Ninety per cent of them were HENRYs,” Mr. Rasotto notes.
He ended up acquiring 61 millennial clients, most of whom work as lawyers, accountants and business owners. In 2020, during the COVID-19 pandemic, Mr. Rasotto had purchased a similar book of 50 clients.
The seller had wanted a successor with similar values. Mr. Rasotto jokes that he was vetted thoroughly during their tennis matches, during which he remained even-keeled.
“Matches reveal a lot about a person,” he says. “If a point doesn’t go well and if your game is struggling, do you vent with negative frustration or remain cordial?”
The price
Negotiations took more than a year of tennis matches, meetings and dinners. Mr. Rasotto paid 2.5 times recurring revenue for the book, the industry average. He paid for the book up front with savings.
To protect his purchase, he included a provision that if a client left within two-and-a-half years, the seller would pay a clawback. For example, if a client left after one year, the seller would reimburse the recurring revenue for the remaining year and a half.
“That gives the seller incentive to make sure the clients stay,” he says.
The transition
The advisors co-drafted a personalized e-mail message for each client, explaining their shared vision and values. Introductory phone calls came next.
“We would get a brief update on their situations and he’d pass the baton off to me,” Mr. Rasotto says.
They then met virtually with every client. While conducting 61 video calls over a month was a ton of work, Mr. Rasotto underscored the importance of getting in front of clients relatively quickly.
“You want to make sure that they know they’ll be in good hands,” he says. “Once we finalized the deal, the clients were all on board.”
Advice for buyers
Negotiate with the seller to see if financing the purchase over time is a possibility, Mr. Rasotto says. He agreed to pay the seller up front, as that was what the seller wanted, but doing so meant a few lean months for him personally.
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.