Ralph Steiner, CLU, ChFC – Passing the Baton
For over four decades, Ralph Steiner built an outstanding financial services practice in the Minneapolis and St. Paul area. He is an active member and Past President (2006-2007) in the Twin Cites FSP. Year after year, Ralph’s refined business skills and strong work ethic consistently placed him among the elite producers in the financial services profession. Ralph’s story about how he successfully sold his practice is not unusual, but is worth telling.
Here is a conversation between Dennis Goedders, CLU, ChFC, a Twin Cities FSP member and Regional Sales Director at Midland National and Ralph:
Dennis: How did you come to the conclusion that it was time to move out of your practice?
Ralph: It was actually my clients that helped me make that decision. At the end of interviews I would ask my clients if they had any other questions and they said as a matter of fact, yes we do: “how long are you going to continue doing this? What happens to our accounts if you’re not here?” I really didn’t have a very good answer so I decided I needed to start a transition plan, not only for myself, but principally for my clients.
Dennis: What were some of the challenges that you found as you soul searched and tried to put the plan together?
Ralph: I didn’t have the education knowledge, or experience to put together my own transition plan. I had put together a number of transition plans with my clients, but I hadn’t personally experienced it for myself. The net result is I made a lot of mistakes and went down a lot of dead ends. I talked to a lot of the wrong people who weren’t really qualified buyers. They didn’t have the, experience, money, staffing or knowledge to purchase a practice. I wasted a lot of time.
Dennis: What were some of the mistakes you discovered?
Ralph: My office was in the Roseville area and I thought I needed to find someone who was within walking distance of my office. As a result, I excluded a lot of good potential buyers. I was moaning and groaning to my CPA about the process. He said: “you’re talking to the wrong people. You are talking to people who are thirty years younger than you are. They are nice people, but their income level and yours are so far apart that they will never catch up to you. They won’t be able to afford your practice.”
Dennis: Once you discovered that, how did your thinking change?
Ralph: I widened the geography and narrowed the age range. I needed to look for someone who was as successful as me and who had a practice as large as, or larger than mine and had the staffing to handle the transition. I needed to find someone who had the capability to take care of my clients. The biggest issue was not the price; it was more about value and belief systems. How did their clients match up with mine? Were they fee or commission based? Were our practices compatible? I actually ended up selling my practice to someone who was 90 miles away who wanted to set up an office in the Twin Cities. If I hadn’t changed my geographical thinking, I would never have found the right match.
Dennis: So you liked each other and you had commonality, what were the challenges in putting the deal together?
Ralph: We met a couple times a month for eight months and put together a letter of intent that we both felt comfortable with. They wanted me to stay on for a minimum of two years by contract; I actually stayed three years to transfer my clients to them one by one. For my clients the process was almost an invisible transition. My clients still worked with me, but more and more I was bringing in other people and by the third interview, my clients were very comfortable with the new buyers.
Dennis: How was the process received by your clients?
Ralph: Let me sum it up with a short story. The whole process came to an end with a line in the sand, so to speak, at my retirement party. Many of my clients came up to me and said: “Ralph, we want to thank you for all your care and concern over the years. We really appreciate the time and thought you put into finding someone to work with us. We also appreciate the time you took to help us get to know them and we are so grateful that you are leaving us in great hands.”