ADVISER M&A: TALK BUT LITTLE ACTION

While many advisers talked the talk about merging and acquiring one another in 1998, only a few managed to walk the deal-doing walk.

Established buyers of financial planning practices, like Reinhardt Werba Bowen of San Jose, Calif., were joined by newcomers like Schaumburg, Ill.-based Essex LLC. Small banks looking to provide their wealthiest clients with investment advice also were among the suitors.

Meanwhile, large broker-dealers like American Express Financial Advisors and Financial Network Investment Corp. launched programs to help their reps buy out the practices of fellow advisers who want to leave the business. They hope to keep more of these firms’ clients in-house, as well as to broaden the effort to go after the practices of reps affiliated with outside brokerages.

But there are big roadblocks to getting deals done.

For one thing, valuing adviser shops, which depend primarily on one or two individuals, is tough. In many cases, sellers are disappointed with the prices their practices fetch. In addition, buyers often insist that principals stay on for a year or longer to prevent client defections.

Nevertheless, the urge to sell is higher than ever, judging by the number of inquiries from advisers, says Mark Tibergien, a consultant for Moss Adams LLP in Seattle, which puts price tags on adviser shops. And some heavy hitters are taking action. In November, Lynn Hopewell, one of the most respected financial planners in the country, said he is shopping his Fairfax, Va., firm, Monitor Group, which supervises $130 million.