Making the Transition
Industry data demonstrates the trend toward consolidation, with the number of RIA acquisitions increasing over the past several years, up from 58 in 2016 to 108 in 2019.
The transition must be smooth, especially for clients
Advisors feel confident that once they make the decision to sell part or all of their business to an aggregator, clients would follow their lead and trust that it is the right decision — even if they are at first slightly concerned, because “if handled correctly, it should be seamless.”
Advisors who have already made the transition say that having a helpful project manager with the acquiring business is invaluable to ensure a smooth integration, and that there are benefits they did not realize ahead of time, such as the value of a supportive community or the removal of some back-office operations like benefits and payroll.
Overcoming the emotional considerations
While partnering with an aggregator makes financial sense, a financial advisory business owner must also feel confident that the acquiring firm’s culture and values, as well as deal structure, make them comfortable that the two firms’ goals and values are aligned. The best way to do this is to get to know the firm and some of the advisors who have already made the transition ahead of time.
Number of RIA Acquisitions
Total 2016 = 58
Total 2017 = 70
Total 2018 = 74
Total 2019 = 108
Source: How Independent Broker-Dealers Use M&A to Build their Businesses, Fidelity Investments
*Data as of 10/31/19
