Using a Partial Book Sale to Gradually Step Away

By age 63, financial advisor David Workman faced a challenge to service the 3,000 clients of his solo practice as he had in the past. And he was without a succession plan.

But four years ago, Workman came up with a perfect solution: He brought in a young advisor in a deal that ties in with LPL Financial’s new partial book sales program.

The arrangement is both a partial book sale, and a merger and acquisition.

Matt Jennings, 25, began on Workman & Associates’ lowest rung and learned every aspect of the practice. He is now majority owner. In two years, he will be the 100% owner.

“Matt was always destined to become … captain of the ship,” Workman, 67, says in an interview with ThinkAdvisor.

Workman, based in Logansport, Indiana, has been an independent advisor affiliated with LPL Financial for 36 years. His assets under management are about $625 million, and he is in LPL’s top 1% of advisors by annual production.

He trained to be a financial advisor, learning how to sell features and benefits, at Edward Jones in South Dakota.

In the interview, Workman describes how how he has started to step away as Jennings has moved up in the practice.

Here are highlights of the conversation:

THINKADVISOR: What appealed to you about LPL’s partial book sales program?

DAVID WORKMAN: I knew it was time because I couldn’t still successfully service all the 3,000 clients we have. That’s a hard pill to swallow. But I knew at some point I needed to bring in another advisor.

Did you sell part of your book?

Under the umbrella of the partial book sale program, we did a hybrid: a partial book sale and a merger and acquisition.

So four years ago, you brought in Matt Jennings, now an accredited investment fiduciary. Does he own half the business?

Matt is the majority owner now; after two more years, he’ll be the 100% owner. I’ll be stepping away from Workman & Associates, but I may be staying with LPL to work with younger advisors as a consultant.

My wife [co-founder] Beth and I had multiple opportunities to sell the business for higher amounts of money, but we felt bringing in Matt was in the best interest of our clients.

Why did you choose him?

I’ve known Matt since he was 3 years old. When he was a junior in high school, he started coming in and asking about being a financial advisor.

It was his intention to come back [from studying at Grace College] and be part of the local community here.

Even though we do business in 30 states, we thought that was very important.

I assume you had no succession plan?

No, except we had it written that upon my demise, Beth would be able to sell the office, and LPL’s upper administration would assist her.

What was Jennings’ professional background when he first came onboard?

[After college], he worked for a local bank that had an LPL branch.

When we brought him in, he started at the very lowest [rung] to learn everything about the business. Unless he screwed up, Matt was always destined to become the owner, the captain of the ship.