MAKING THE DECISION
"The most important reason would be to improve the client experience"
Knowing when the time is right
Advisors acknowledge a trend toward consolidation. They point to the strong economy and current seller’s market, which may be encouraging transactions before a downturn and potential declines in valuations — but would selling their business be right for them?
Some advisors say they periodically “take the call” from aggregators, while others consider selling as “a last resort.” Those who entertain offers say, “the most important reason would be to improve the client experience.”
However, for an entrepreneur who owns a financial advisory business, it can be difficult to think about joining forces with another firm despite potential advantages.
A collaborative partnership is preferable
Advisors know there are different models for aggregators, but many were unaware of specific differences between these firms. However, they did express concerns about the deal structure — with many indicating dissatisfaction when an aggregator prioritizes taking their firm’s payout from profits first, and the acquired business’s portion is at risk. They say they would prefer a collaborative relationship in which incentives are shared and interests are aligned.
Other factors they consider include retention of firm ownership, whether they have the option to retain their brand identity versus leveraging the brand of the aggregator, and whether they gain access to resources that can help them grow.
About 40% of advisors interviewed say they've considered selling to an aggregator
Weighing the benefits of partnership
About 40% of advisors interviewed say they’ve considered selling to an aggregator and are willing to listen to opportunities. For them, beyond capitalizing some value, the main drivers are business growth and succession planning. In addition, advisors want to focus on doing what they do best, working with clients, and they would welcome support for functions that distract them from serving clients. Advisors understand there are potential benefits that come with size and scale, such as stronger buying power that translates to better resources for them and more favorable pricing for clients.
If you were to enter into a partnership with
an aggregator, what would be the primary
driver(s) of such a decision?
If you were to enter into a partnership with an aggregator, what would be the primary driver(s) of such a decision?
Capitalize Firm Ownership
Succession Planning
Capital for Growth
Better Technology Platform
Outsource Back-Office
Marketing Support
