WEBINAR EXECUTIVE SUMMARY
WEBINAR EXECUTIVE SUMMARY
5 Keys to Successful M&A
- Several trends are driving RIA mergers and acquisitions.
- In a seller’s market, buyers must position themselves as attractive business partners.
- M&A success depends on operational efficiencies.
- Creating a digital capacity for onboarding and workflow automation is fundamental to an outstanding client experience.
- To attract and close deals, buyers must articulate a clear value proposition and message to sellers.
As registered investment advisors (RIAs) grow older, the number of industry mergers and acquisitions is increasing like never before. For opportunistic firms, M&A activity has become a key growth strategy.
However, maintaining client loyalty and cultural compatibility are critical for merger success. Professional buyers are looking to technology to improve operational efficiencies, bolster value propositions, and create smooth onboarding processes for acquired clients and staff.
In our recent webinar, Tim Welsh (Nexus Strategy LLC), Linda Ding (Laserfiche), and Matt Sonnen (PFI Advisors), discussed how buyers can leverage technology to make their firms more attractive to selling advisors. Read the summary below, download a PDF or watch the webinar.
click presenter image to see bio
Webinar : 5 Keys to Successful M&A
According to a recent Wealth Management survey, RIA mergers and acquisitions are hitting record numbers as the growing population of aging business owners are getting ready for their golden years. In our recent webinar you’ll hear industry veterans discuss key strategies to create business synergies and profits via M&A deal making.
1. Aging Advisors
The average age of RIA owners is approaching 60. With more advisors over 80 than under age 30, it’s not surprising that 40% of owners are looking to retire in the next 10 years.
2. Regulatory Pressures
Fiduciary requirements are increasing and the asset management industry is squeezing out of excess basis points.
3. Fee Compression
A 2017 Fidelity Benchmarking Study found that 60% of advisors are routinely discounting their fees by 20 to 30 basis points to attract and retain clients.
4. Robot Competition
Increasingly, wealth management tasks are being automated. This is affecting advisors’ businesses. The volume of robo assets could grow dramatically by 2024. (see figure 1.)
5. Client Expectations
Client experience (CX) matters. Amazon.com’s service levels have increased customer expectations in all industries, including wealth management. Pershing has found that firms focusing on CX are growing five times faster than those that are not.
Figure 1. Robot Competition
“Thanks to industry consolidation, growing advisors can turbocharge their assets under management. In addition, M&A provides opportunities for exiting advisors to find a good home for their clients.”
– Tim Welsh, CFP, President, Nexus Strategy, LLC
In a seller’s market, buyers must position themselves as attractive business partners.
Dan Seivert, the CEO of ECHELON Partners, recently noted, “There should be a lot more deals being done. However, there are a lot of bad buyers out there.” In a seller’s market, buyers must work harder. Acquiring firms must evolve from ill-equipped buyers to proven partners.
Characteristics of attractive buyers include:
- A clear value proposition
- Technology and operational expertise
- A multi-disciplined leadership team
- Management capacity for deals
- A transparent compensation structure
- A strong, well-defined culture
- Transition support which includes staff for onboarding new clients