Why I Started Asking “Build or Buy”
Like many early-career planners, I want to own my own firm someday.
At this point in my career, I’ve worked for five financial planning firms, ranging from $100 million to $600 billion in assets under management. That experience has taken me across broker-dealers, insurance-based businesses, and both fee-only and fee-based planning firms.
Along the way, I started asking myself: How am I actually going to become an owner?
Some people recommend staying at a firm for a long time and working your way up to ownership, potentially becoming the successor to an existing owner.
That path has just never excited me.
I am a very impatient person, often to my detriment. But here we are.
Additionally, none of the firms I’d worked for had a business model that appealed to me enough to see myself staying long term and working toward ownership.
So, if I’m not patient enough to wait for a succession opportunity, I haven’t found a firm model I want to buy into, and I sure as hell don’t want to be an employee for my whole life…
What’s a young advisor to do?
BUILD OR BUY!
Or so I thought.
Most recently, I came close to buying a small book through seller financing as a springboard to get my own thing off the ground. The proposed arrangement had some unusual terms that made it appealing to me, and others that warranted a closer look. More on that later.
As it turns out, there are so many ways to go about building or buying, and so many layers to every onion.
I’ve spent the last three years learning about firm structures, buyout arrangements, paths to ownership, and what the heck “ownership” even means. I’m excited to share what I’ve learned with you.
This article is a recap of the advice I’ve received, the options I’ve explored, and the questions I’m still asking.
No promises that all the advice is good. But there’s plenty to think about.
What Am I Actually Trying to Own?
When I started talking about owning a firm, I was put in my place pretty quickly. And, frankly, pretty embarrassingly.
People would ask me, “What do you want?” and I’d confidently respond, “Ownership,” without a clue in the world as to what that actually meant.
I learned pretty quickly that there are different forms of ownership, and they don’t all give you the same things.
If you’re already familiar with the different ways to be an owner in a firm, feel free to skip this section. But if you’re like I was and don’t know the difference between owning your client relationships and owning the business... keep reading.
Owning Client Relationships
This is a big one. A mentor of mine, Cary Carbonaro, is the biggest proponent I know of owning your client relationships.
In our industry, the relationship is incredibly valuable. If clients trust you, that relationship can be a major factor in whether they choose to follow you to another firm.
But when we talk about “owning clients,” it can be confusing. We mean the contractual rights and economic interest associated with those relationships, and what happens if you leave.
My first industry job was in an ensemble practice. As a freshman in college with very little industry knowledge, I thought that was amazing! Our clients could always get ahold of someone, different advisors could specialize in different things, and we could operate as a team for the client.
I still see the benefits of that model. But now I know to ask another question: Where does that leave the individual advisor?
In an ensemble practice, client relationships may belong to the firm rather than an individual advisor. Depending on the agreements you sign, you could build and serve those relationships for years without having the right to solicit those clients if you leave.
And those restrictions aren’t exclusive to ensemble practices.
One of my first advisor roles was with a lovely firm, a great client base, and an amazing team. On my first day, my manager came into my office with a stack of contracts.
I’d had no exposure to noncompetes, nonsolicitation agreements, or really any other business contracts. I had no idea what I was signing.
Feeling like I didn’t have a choice, I signed them.
A few weeks later, I had a mentor review the contracts. They pointed out a 12-month noncompete that, as they explained it to me, restricted me from working for another firm within a 100-mile radius after leaving.
WHAT?!
Whether a restriction is enforceable is a separate question. But finding out what I’d signed after signing it was not my finest moment.
The point is, don’t assume the relationships you build are yours to take with you. Ask the questions, understand the agreements, and get those expectations in writing.
The last example I’ll share is from the firm I’ve been at most recently, which has a structure different from others I’ve encountered.
As I understand the arrangement, I have a 50% economic interest in my client book.
If I want to leave with those relationships, the buyout price is 50% of a valuation based on three times trailing-12-month revenue. If the firm sells, my interest is paid out using that same formula.
While this isn’t full ownership of my relationships, it’s a model I’ve been comfortable with while building my book and bringing on clients.
It’s important to understand what “owning the relationship” means at your particular firm. It’s equally important to discuss what happens when you leave.
In our industry, moving between firms is not uncommon. These conversations are crucial to have from the beginning.
Owning Equity in the Business
Owning your client relationships is one thing. Owning equity in the business is a whole different beast.
When you hear advisors talking about “buying in at 10%” or receiving equity compensation, they’re often referring to ownership in the firm itself.
That could mean shares in a corporation or membership interests in an LLC. Either way, you have a stake in the business as a whole, rather than just an economic interest in your own book.
Depending on the structure and agreements, that ownership may come with voting rights or some say in business decisions. But owning 10% doesn’t automatically mean you get to run 10% of the show.
Ownership can also give you the opportunity to receive profit distributions and benefit from growth in the value of the business. That doesn’t automatically mean a higher paycheck, though.
The firm’s profitability, distribution policies, and the terms of your ownership all matter.
You’re participating in the success, and the risks, of the whole business.
So, What Do I Actually Want?
Before deciding how to become an owner, it helps to know what you’re actually asking for.
Do you want an economic interest in your client relationships? Equity in the firm? Control over business decisions? The freedom to do things your own way? The ability to leave and continue serving the clients you brought in?
And if you own a piece of something, how do you eventually get paid for it?
Those are different goals, and they don’t necessarily come together in the same arrangement.
I started with “I want ownership.”
And now I know how important it is to know what that means.
Build: Starting From Scratch
What Building Actually Looks Like
“Build a book of business.” Such a sexy line, with so much behind it that we don’t see. And if we did... I doubt many of us would find it as sexy.
I can be cocky sometimes and think, Pfft. I’ll just build a book! If they can do it, I can do it! Then I’ll make great money and get that work-life balance everyone talks about.
Turns out there is quite a bit in between.
Building from scratch takes constant work, can be discouraging, and may take years to support you financially. Hopefully, this section gives you an idea of what comes with it. If you still want to go for it... you just might be the kind of person who will kick ass at it.
Startup Costs and Runway
At a conference recently, I was telling an industry friend about “starting my own thing,” feeling pretty cool and pretty excited.
Then he asked, “How are you going to afford that?”
Well. There went that.
He pointed out that I need enough money to cover my life, business operations, registration fees, and the gap before the business can afford to pay me. Even using XYPN requires a budget.
And when revenue starts coming in, how much do I reinvest? When do I pay myself? How do I afford life in the meantime?
I felt pretty stupid, but I learned a lot. Mostly, I need more savings.
He also suggested exploring a self-directed Roth IRA to invest in the business. Since my Roth holds most of my savings at 20, that got my attention. But prohibited-transaction rules mean this is not a straightforward funding option, and finding a willing custodian doesn’t make it permissible.
Rules aside, am I ready to put my retirement savings on the line to start a business at 20?
Hmm. Major soul-searching required.
Choosing Who to Serve
Everyone talks about having a niche. Meanwhile, I’m over here thinking, I would take anyone with a pulse who is willing to pay me.
But many young advisors haven’t worked with enough different clients to know who they want to specialize in serving. Am I finding my focus or limiting myself too early?
XYPN’s research has shown growth advantages for niche firms, including faster first-year revenue growth in its 2024 study. That doesn’t pick my niche for me, but it gives me something to think about.
Getting Clients Without Gray Hair
My mentors keep telling me that trust, empathy, and competence matter more than looking like I’ve been doing this for 40 years.
I hope they’re right.
But being good in a meeting and getting people into that meeting are different challenges.
Referrals, networking, content, professional relationships... what’s my actual plan?
Guess it’s time to put their advice into practice.
Service Model and Pricing
This could be a whole other article. AUM fees, subscriptions, project fees, what makes sense for my clients and the business I want?
Changing models or raising fees can mean uncomfortable conversations later, so I want to think this through upfront.
And while charging almost nothing might get someone to say yes, I still need enough revenue to pay the bills.
Custody, Technology, and Support
Some tech stack considerations:
Altruist combines custody with tools for account opening, trading, portfolio management, billing, and reporting. Fewer systems to make talk to each other? Sounds lovely.
XYPN supports independent, fee-only planners with technology, compliance resources, education, and community. Having people to ask, “What the heck am I supposed to do here?” sounds valuable, but you need to budget for the membership and understand what’s included.
Compliance and Running the Firm
Will I serve as CCO with outside support? Use an outsourced arrangement? Who handles what?
I tend to picture helping clients and building something exciting. Slightly less daydreaming about filings, documentation, and cybersecurity.
Unfortunately, those come with the firm too.
The Advantages and the Catch
Building independently without giving up equity means I can retain full ownership and the profits left after expenses. I can shape the client experience, choose who to serve, and decide how big I want to grow.
There’s also the potential for more control over my schedule. Eventually. Major caveat.
If my personal expenses are low while I’m young, this could be a good time to take the risk.
But my financial well-being is on me. Slow growth doesn’t stop the bills. Market declines can reduce AUM-based revenue. Office space, technology, and support cost money, and so does leaving a steady paycheck behind.
Who This Path Might Fit
Listen. If you’ve read through the expenses, decisions, worries, and possibilities, understand that starting a business can be hell, and still want to do it... you may be great at this.
If security, predictability, immediate work-life balance, and low cortisol levels are your priorities, this may not be your path right now.
And just so you know… this is the path that I personally am leaning towards.
Buy: Acquiring an Existing Book or Practice
Buying as a Springboard
The springboard model is one I don’t think enough people talk about.
A young advisor could purchase a smaller book, say, $20–50 million under management, and serve those clients while building their own practice. Instead of starting with zero revenue, you have a base to build from.
Of course, “smaller” doesn’t necessarily mean cheap. But this is a model I’ve considered heavily.
Finding an Opportunity
At a recent conference, I was talking with the CEO of a fintech firm about this idea.
He suggested exploring Dimensional Fund Advisors’ advisor network, mentioning practices with around $30–80 million under management.
I knew Dimensional from using their investments in client portfolios, but hadn’t considered their advisor community as a place to explore acquisitions. Dimensional offers practice management and succession resources, including a Deals & Succession Conference. These would be independent advisory practices, not client books owned by Dimensional.
That gave me another avenue to explore: finding an advisor with a similar investment philosophy who needs a successor.
Your own network is another place to start. Conferences, LinkedIn, university alumni, and local firms could lead to a warm introduction. People sell for all kinds of reasons. If there’s mutual interest, it never hurts to start the conversation.
What Is the Book Actually Worth?
I’m not qualified to teach practice valuation, but I know enough to want an independent opinion before agreeing to a price.
Financial planners know about the endowment effect: valuing something more highly because it’s ours. I wouldn’t assume advisors are immune when it comes to their own firms.
And a multiple alone doesn’t tell the whole story. Revenue and earnings multiples measure different things, and the business and deal structure matter.
In one deal I considered, the proposed price was 12 times trailing-12-month revenue. Yes, revenue. I’ll get into that arrangement later.
Lesson Learned: an asking price is not an independent valuation, or proof that the purchase makes sense for me.
Upfront Cash and Purchase Payments
Depending on the financing arrangement, I may need a down payment, money for transaction costs, and reserves after closing.
I’ve never taken out a business loan, so I’m not going to pretend to be your expert here. But I would want to understand the interest rate, repayment terms, guarantees, and exactly what I’m committing to.
Then comes the bigger question: Can the business afford the payments and its operating expenses and me?
What happens if markets fall 10%, 20%, or 30%? What if clients leave?
“I can afford it if everything goes perfectly” is not a viable plan.
Looking Under the Hood
Several times, I’ve taken a job thinking, Wow. This is seriously the firm of my dreams!
Then I looked under the hood.
I’ll spare the details, but I’ve seen some crazy things. And buying a business requires a much deeper look than interviewing for a job.
Revenue, expenses, compliance history, client agreements, and the seller’s actual responsibilities all deserve attention. I want to know what I’m inheriting, including the parts that didn’t make it into the sales pitch.
Are the Clients a Fit?
I know this sounds morbid, but... how much of the book could leave through deaths?
Older clients aren’t automatically a problem. But I need to understand their needs, build relationships with their families, and avoid assuming those assets will stay forever.
Service expectations matter too.
I once explored a position where everything seemed like a green flag. Then the owner casually mentioned that he prepared clients’ taxes.
YOU FILE THE CLIENTS’ TAXES? ALL 300 OF THEM?
That wasn’t a service I wanted to continue offering. But it was something clients expected.
Buying the revenue also means understanding what clients expect you to do to earn it.
Employees and Operations
Are there employees? Can the business support their salaries? What do their agreements require?
One book I considered buying came with employee agreements that, as the arrangement was explained to me, restricted my ability to terminate those relationships after the purchase.
So much for assuming ownership meant I could change whatever I wanted.
The Advantages and the Catch
Buying can give me existing revenue, client relationships, and potentially staff and systems. It could be the springboard that helps me build without starting entirely from scratch.
But I’m paying for that head start.
Debt payments, client departures, transition costs, and unexpected obligations can eat into the income I thought I was buying. The seller’s involvement during the handoff matters, too.
And if the services, clients, or culture don’t fit what I want to build, I could spend a lot of money buying myself a job I don’t like.
Who This Path Might Fit
If you want an established base, enjoy serving existing clients, and can handle the financial and operational responsibility, buying could make sense.
But if the main appeal is “at least I won’t have to prospect,” I’d think a little harder.
Buying a book gives you somewhere to start, but it's your job to continue building.
Seller Financing: Paying for the Acquisition Over Time
What Seller Financing Means
Want to buy a book but don’t have the capital, or don’t want to fund the whole purchase through a bank?
Sometimes, the seller will finance some or all of the purchase price. You make payments to them over time, often using revenue from the acquired book.
The terms can be more flexible because you’re negotiating directly with the seller. That flexibility can be helpful, but it also means there’s a lot to understand before signing.
Down Payments, Interest, and Payments
Some arrangements require a down payment, but not all.
I recently explored buying a book with zero down. As a 20-year-old, that was pretty appealing. I don’t know about other 20-year-olds, but I’m personally not swimming in money. Three years of maxing out my Roth is about the extent of it.
But zero down doesn’t mean zero cost. The purchase price, interest, and repayment terms still matter.
Payments might follow a fixed schedule or be tied to revenue. In the deal I considered, the proposed payments were at least 25% of revenue, with the option to pay more toward the balance.
That sounded manageable. But I still needed to understand how much would go toward interest, how quickly the balance would decline, and what happened if revenue dropped.
What Happens If Clients Leave?
Buying a book doesn’t guarantee clients will stay, as discussed in a previous section.
A separate bank loan generally still needs to be repaid even if acquired clients leave. Any purchase-price protection would need to be negotiated with the seller.
In a seller finance, that is not the case.
In the deal I considered, there were no client-retention guardrails. Definitely something I’d pay more attention to now.
The Seller’s Role After the Sale
Will the seller help introduce you to clients? Stay involved for a defined transition period? Continue working in the business?
In one arrangement I explored, the seller wanted access to the software, infrastructure, and systems “indefinitely,” even after the acquisition was complete.
Indefinitely is a pretty long transition period.
I’d want to understand their role, who pays for that access, what information they can see, and when the arrangement ends.
At least personally, if I'm buying a business, I don’t want the owner hanging around "indefinitely" after paying it off.
Where It Can Go Wrong
Hidden information, unclear responsibilities, missed payments, disagreements about client retention... there’s plenty of room for things to get messy.
And unlike a seller who gets paid at closing and walks away, this person may be in your financial life for years.
Before Signing
I would have both an attorney and a CPA review the arrangement, not just the payment amount, but the purchase terms, tax treatment, obligations, and what happens if either party wants out.
I’d also consider working together before committing. That gives both sides a chance to understand the business, meet the clients, and see how they work together.
Succession: Becoming the Buyer Before the Seller Leaves
Joining With Ownership in Mind
Joining an experienced advisor with the intention of eventually taking over can be a great path to ownership.
The caveat is patience. Something that is very hard for me personally.
You might find someone ready to retire in a few years. But you could also spend years working toward ownership while the finish line keeps moving.
I once worked at a firm I hoped to buy into and learned that a connection of mine had previously worked there for seven years. After hearing some vague references to him around the office, I reached out.
We ended up on a 90-minute call about his experience. According to him, he’d spent years chasing a carrot on a stick.
He said the owners initially talked about retiring within four years, but wouldn’t document an ownership path or give him an opportunity to buy in. Seven years later, he left with no ownership and a lot of frustration.
Gradually Taking Over Relationships
One advantage of succession is that you can get to know clients before the original advisor leaves.
You attend meetings, build trust, and gradually become someone they’re comfortable calling. That can make the eventual handoff feel less abrupt and help support retention.
Earning Equity Versus Buying It
Ownership might come through a purchase, equity compensation, or a combination of both.
Maybe the arrangement is, “You’ll receive 5% after five years,” with an opportunity to purchase more later. Earning equity along the way could reduce how much you need to buy eventually, but the terms, vesting requirements, and tax treatment are important factors.
If you’re patient and genuinely want to stay somewhere for the long haul, first of all, I’m jealous of you. Second, this could be a good fit.
What Makes the Opportunity Credible?
For me, the starting point is documentation.
What ownership will become available? When? How will it be valued? What conditions do I need to meet? What happens if the owner changes their plans, or I leave?
I’ve put too much faith in verbal promises before. “We’d love for you to take over someday” is exciting, but I want to know what someday actually means.
Put it in writing, have it reviewed, and make sure everyone understands what they’re agreeing to.
Depending on Someone Else’s Timeline
An owner might say they want to retire. They might also discover that working less while retaining ownership suits them pretty well.
That can be a perfectly reasonable arrangement if everyone agreed to it. It becomes a problem when you joined expecting a transfer of ownership that keeps getting postponed, and you start getting resentful of the moving finish line.
I’d want to know whether we’re planning for an actual sale, a gradual ownership transition, or for me to take over more of the work.
Succession can give you time to build relationships, learn the business, and grow into ownership. You just don’t want to get stuck in a 7 year rat race.
An Investor-Backed Build: The Option I Hadn’t Considered
A friend recently asked me, “What’s next for you, Jenna?”
He’d built an extremely successful practice in a short amount of time, and at a younger age than most. After sharing my ambitions of ownership, I asked what he recommended: build or buy?
His answer was different from anything I’d heard.
“Get an investor, and build from there.”
“An investor?”
He suggested partnering with an established RIA that could help fund early business development and operations in exchange for 7–10% ownership.
Wait... I could build my own thing without personally funding every dollar of it?
That got my attention.
What Am I Actually Giving Up?
Then I mentioned it to a mentor.
“Of course they want to invest! Be careful about what you give up.”
They pointed out that 7–10% could become a significant amount at the scale I’m hoping to reach.
Fair point. It’s easy to give away a percentage of something that doesn’t exist yet. Slightly harder when that something becomes valuable.
And the percentage is only part of the conversation. What would the investor contribute? Startup funding? Technology, compliance support, mentorship, referrals? Would that support continue, or would the money eventually run out while their ownership stayed? Would there be a mentorship component if I had questions about clients or running a business?
I’d also want to understand their decision-making rights, how profits would be distributed, what happens if we need more capital, and whether I could buy them out later.
Because “I still own 90%” doesn’t tell me everything about who gets a say.
Is the Tradeoff Worth It?
I’m still figuring that out.
Funding and support could make starting more feasible and give me room to build. But I’d be exchanging some of the future value of the business for help today.
That might be worthwhile. I just want to understand what I’m getting and what I’m giving up before getting too excited about someone wanting to invest in ME.
Where I’m Landing for Now
I hope this was helpful to those considering paths to ownership in our industry. There are so many ways to become an owner and so many ways to mess up along the way. I’ve managed to find a few already.
Hopefully, you can learn from some of my mistakes and find a path that works for you.
Here’s where I’m at personally:
- I want to own the business AND have ownership rights in my client relationships.
- I might be open to bringing in an investor, depending on what I’m getting and what I’m giving up.
- I’m open to buying a book as a springboard to build from an established base.
I’m still figuring this out and documenting as I go. Clearly, “I want ownership” turned out to be a slightly bigger question than I anticipated.
If this was helpful, follow me on LinkedIn or subscribe to my newsletter. I’ll keep sharing what I learn and hopefully fewer mistakes, but no promises.