Episode summary
Deciding To Add A Partner After Leaving A Partnership -Kathy Longo | Financial Advisor Success Ep476
Financial Advisor Success (Kitces)
· · 1 hr 30 min · Hosts: Michael Kitces, Adam Van Deusen · Guests: Kathy Longo
Summary
Kathy Longo described how Flourish Wealth Management has grown to $455 million of AUM, 163 client households, and about $3.2 million of revenue, while keeping a focus on women and wealth and a team-based service model. The bigger shift has been strategic: after once leaving a partnership to build alone, she decided the firm now needs ownership beyond the founder to support succession, retain talent, and create a long-term home for clients and employees.
A major catalyst was an acquisition completed in stages, where the selling adviser transitioned 38 clients in four tranches rather than all at once. Kathy said that structure made the transition more personal and manageable, but also more emotionally complex, since the seller could reconsider after each tranche. The firms used external help to reset communication when personalities clashed, and the deal was shaped by loan constraints, a 10-year amortization, and client-by-client consent.
Kathy also walked through Joey’s 5% buy-in, financed by a 10-year personal loan at 5% interest. She said the valuation work from Succession Resource Group was both affirming and instructive, highlighting the firm’s 8.55 EBITDA multiple, client age profile, and growth opportunities. She emphasized that adding a partner forced more discipline around salaries, distributions, and monthly financial reporting, while her next challenge is building stronger operations support so she can spend more time as visionary and less as day-to-day implementer.
Key takeaways
- Kathy Longo said Flourish grew to $455 million of AUM, 163 households, and about $3.2 million of revenue while staying focused on women and wealth.
- She said Joey bought 5% of the firm through a 10-year personal loan at 5% interest, rather than using outside financing.
- Kathy said the firm’s valuation came in at an 8.55 EBITDA multiple, and the analysis flagged the firm’s average client age of about 62.
- She said the earlier acquisition was completed in four tranches of 38 clients, which reduced operational risk but created more room for emotional second-guessing.
- Kathy said future ownership discussions will be tied to retaining key people and building a stronger operating layer, not to a fixed exit date for her.
Notable quotes
“the importance of the firm surviving well beyond me and to really take care of my clients and be there for their their long-term needs”
“we bought those clients uh like a quarter like over four different tanches”
“I realized the the importance of the firm surviving well beyond me and to really take care of my clients and be there for their their long-term needs”
How the episode opens
Welcome to the Financial Advisor Success Podcast, where you go behind the scenes with financial planner, speaker, and consultant Michael Kitsus to hear stories of how leading financial adviserss navigated the inevitable challenges that arise on the path to success and get insight from leading industry consultants about how to break through to the next level in your advisory business. And now, here's your host, Michael Kitsus.
Welcome everyone. Welcome to the 476th episode of the Financial Advisor Success Podcast. My guest on today's podcast is Kathy Longo.
Kathy is the founder of Flourish Wealth Management, an RAIA based in Edina, Minnesota that oversees $455 million in assets under management for 163 client households. What's unique about Kathy though is how she decided to add a partner despite previously leaving a partnership within a large RAIA to start a business that she could drive individually. In this episode, we talk in depth about how Kathy decided to offer an ownership stake to an adviser on her team to both get the ball rolling on a succession plan that will allow her firm to remain independent and to reward the adviser for his contributions and commitment to the business.
Why Kathy chose to issue a self- financed loan for her new partner's buyin for both tax planning purposes and to better manage debt she had taken on to finance an acquisition. and how Kathy benefited from using an external valuation service, not only by receiving an accurate valuation for the firm for her new partner's buyin, but also by learning about the key drivers that would propel her firm's value going forward. We also talk about how Kathy has found success in the latest stage of her growth journey, in part by working with external partners to better define her firm's culture and values and align them with its compensation model and career paths.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- adding a partner
- succession planning
- advisory firm operations
- hiring and career development
- minimizing acquisition risk
Companies and tickers mentioned
- Flourish Wealth Management
Watch the episode
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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Financial Advisor Success (Kitces), this episode and its artwork belong to Michael Kitces. Octagon is not affiliated with the show; this page is an independent summary.
