What most advisors get wrong about buying (and selling) a block of business

That gold medal game was insane.

Maybe the best hockey game I’ve ever watched.

And let’s all agree: Canada outplayed the US.

But 3-on-3 overtime? What the hell is that in a gold medal game?

I’m not bitter. Canada played great. We just didn’t get the result we wanted.

But it was a hell of a reason to wake up early on a Sunday morning. And I’m guessing everyone across the country was doing the same thing.

Congrats to the US team. And big shout out to Brady Tkachuk and Jake Sanderson from the Ottawa Senators for bringing home gold.

Also, seeing the tribute to Johnny Gaudreau with his kids on the ice was really touching. That moment hit.

Alright. Back to business.

I’ve been having a lot of conversations lately about block acquisitions.

Advisors who want to buy. Advisors who want to sell. And advisors who have no idea what either side of that transaction actually looks like.

So I wanted to write this email to clear up some of the confusion.

Because if you’re thinking about buying a block, there are things you need to know before you make an offer.

And if you’re thinking about selling, there are things you should be doing right now to maximize what you’ll get.

Let’s start with the buying side.

The hidden reality of buying a block

When most advisors think about buying a block, they think about revenue.

“This block generates $300,000 a year. If I buy it, I’ll add $300,000 to my income.”

That’s not how it works.

At least not in year one.

Here’s what actually happens.

You buy the block. You get access to the client files. And then you realize you have about 200 clients you’ve never met, with expectations you didn’t set, and problems you didn’t create.

So for the first 12 to 18 months, you’re not building your business.

You’re servicing theirs.

Meeting every client. Reviewing every policy. Cleaning up every file. Answering questions. Managing expectations. Fixing things the previous advisor left behind.

It’s not passive income. It’s a full-time job.

Now, does it eventually pay off? Absolutely.

But you need to go in with your eyes open.

The advisors who succeed with block acquisitions are the ones who treat it like what it is: a long-term investment, not a quick revenue boost.

Insurance blocks vs. wealth blocks (and why it matters)

Here’s something most advisors don’t realize.

Not all blocks are valued the same.

Insurance blocks typically transact at 2 to 3 times earnings.

Wealth blocks, seg funds, mutual funds, securities, discretionary PM assets, transact at much higher multiples. I’ve seen 5x, 10x, and in some cases as high as 15x.

Why the difference?

Because insurance revenue is heavily front-loaded.

You get paid when the policy is sold. The trail fees are modest. And they don’t grow over time unless you write another case or get introduced to a younger family member.

Wealth revenue, on the other hand, compounds.

As the assets grow, your revenue grows. The client doesn’t need to do anything. The market does the work for you.

That’s why wealth blocks are worth more.

And here’s something smart advisors are doing.

If they have both an insurance block and a wealth block, they’re selling them separately.

Not to different buyers necessarily. But as separate transactions.

“Here’s what the wealth block is worth. Here’s what the insurance block is worth. Two different numbers.”

That way, they’re not averaging down the value of the wealth block by blending it with the insurance block.

It’s a small move. But it can make a huge difference in what you walk away with.

The biggest mistake I see advisors make when buying

Here’s a pattern I’ve seen play out over and over.

An advisor wants to buy into a practice. The retiring advisor says, “Great. Buy 30% now, and over the next few years, you’ll buy the rest.”

Sounds reasonable, right?

Wrong.

Here’s what actually happens.

The retiring advisor doesn’t retire.

They hang around. They keep working. They keep managing their top clients. And they realize, “Wait a second. This is a great setup. I’ve got someone else doing the work on the smaller accounts. I’m still making money. I only have to manage my best relationships. Why would I leave?”

So they don’t.

And the advisor who bought in is stuck.

They’re doing all the servicing work, but they don’t fully own the business. The retiring advisor is still there, still making decisions, still confusing clients.

I’ve talked to countless advisors who went through this. And every single one of them said the same thing.

“The biggest mistake I made was not buying the block outright from the start.”

If the retiring advisor isn’t ready to leave, you’re not ready to buy.

The right way to structure a buyout

Now, that doesn’t mean the retiring advisor has to disappear on day one.

You want them around for the transition. You need them to introduce you to clients, help with the handoff, answer questions.

But here’s the key.

You structure the deal so they have to leave.

One way to do that is through a vendor take-back.

The retiring advisor holds some of the debt. You pay them over 2 or 3 years. And once that period is up, they’re out.

Not because you couldn’t borrow all the money upfront. But because the vendor take-back keeps them motivated to help with the transition.

I was talking to a financing company recently, and they said the same thing.

They recommend a vendor take-back not for financial reasons. But to keep the retiring advisor involved during the transition.

After 2 or 3 years, the financing company pays out the vendor take-back, and the retiring advisor is done.

Clean exit. Clear timeline. No lingering presence.

That’s how it should work.

What you need to know about financing

Speaking of financing, here’s something that surprised me.

I talked to a lender who specializes in block acquisitions. And I asked them, “How much does credit rating matter?”

They said, “Not much.”

The decision is based almost entirely on the cash flow of the block itself.

If the block generates $300,000 a year, they’ll lend based on that. Your personal credit rating might get you a slightly better rate, but it’s not the deciding factor.

I also asked, “Do I need to put a down payment? Like 10 or 20%?”

They said, “No. Nobody does that.”

The block itself is the collateral.

They typically structure the loan over 10 years. Sometimes longer if needed. And the rates aren’t crazy.

The main thing they want to see is that you can service the debt while still taking a salary and running your business.

If you can show that, the financing is pretty straightforward.

If you’re thinking about buying a block and need financing, reach out. I can connect you with people who do this every day.

For advisors looking to sell: start preparing now

If you’re on the other side of this, if you’re thinking about selling your block in the next few years, here’s what you need to know.

Nobody wants to buy a mess.

If your files are disorganized, your CRM is outdated, and your clients haven’t been contacted in years, your block is worth less.

A lot less.

The advisors who get top dollar for their blocks are the ones who spend time preparing.

They clean up their files. They update their CRM. They make sure every client has been contacted recently. They document their processes.

They make it easy for the buyer to take over.

And here’s the other thing.

If you have a wealth block, separate it from the insurance block when you go to sell.

Don’t blend them. Value them separately.

You’ll get more for the wealth block that way. And you’ll make it easier for buyers to understand what they’re actually buying.

The hidden value of a well-positioned block

Here’s something most advisors don’t think about.

The way you market your block matters.

If you just quietly reach out to one or two advisors and say, “Hey, I’m thinking about selling,” you’re leaving money on the table.

The more eyes you get on your block, especially the right eyes, the higher the value.

But most advisors don’t know how to market a block properly.

They don’t know who to approach. They don’t know how to position it. They don’t know how to package it in a way that makes buyers actually want it.

That’s where having someone who understands the process can make a huge difference.

If you’re thinking about selling in the next 1 to 3 years, start preparing now.

And if you want help positioning it the right way, reach out.

I’m happy to have a conversation about what that looks like.

One more thing: CRM matters more than you think

If you’re buying a block, one of the first things you should ask is, “What CRM are they using?”

Because if they don’t have one, or if it’s a disaster, you’re going to spend months just trying to figure out who the clients are and what policies they have.

At PPI, we have a tool called Amplify. It’s a customized version of Life Design Analysis that imports your entire block.

Every policy. Every client. Every opportunity.

It makes the transition infinitely easier.

And if you’re selling a block, having everything organized in a CRM makes your block worth more.

Buyers don’t want to inherit chaos. They want a clean handoff.

Final thoughts

Buying a block can be one of the best ways to grow your business.

But it’s not a shortcut. It’s a long-term play.

The first year is going to be hard. You’re going to be servicing clients, not building new business.

But if you do it right, if you buy the right block, if you structure the deal properly, and if you actually take care of the clients, it compounds.

And selling a block, if you do it right, can set you up for the next phase of your life.

But you have to prepare. You have to position it properly. And you have to get it in front of the right people.

If you’re thinking about buying or selling, reach out.

I’d be happy to talk through what that looks like.

Talk soon,

Andrew​​​​​​​​​​​​​​​​