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When going through a merger or acquisition, business continuity can be tricky. But advisor teams that make sure they are combining with firms with aligned cultures, services or business trajectories have a much higher chance of a successful transition — and retaining clients.
Before closing the deal, advisors need to clearly define what the value-add of the transaction will be for all parties involved.
“It’s important to communicate internally before you even talk to clients about M&A,” Maryann Vognild, a wealth advisor at Focus Partners Wealth, said. “Don’t wait until you need to start calling clients to discuss this.”
Vognild notes that mergers and acquisitions should be good for the clients, employees and leadership.
If the deal doesn’t work for any of those three, “it’s going to fail,” she said. “Come up with concrete reasons that it’s going to be good for clients — and everyone involved.”
Vognild co-led an advisor team which joined Focus Partners Wealth in 2020. At that time, Focus was called Buckingham Strategic Wealth, but in January, Buckingham rebranded under the new moniker.
As part of the transition, Vognild has been able to focus more on duties that are core to her wealth advisor role, she said.
“In my instance, I was wearing too many hats before. [The change has] been good for clients because we’ve been able to get some of the things that were not core to my job off my plate. Now I can focus more on clients,” Vognild said.
“For instance, I’m not trading daily anymore. I used to be heavily involved in that. I’m still aware of what’s going on and direct what’s going on, but I don’t have to be the one pushing the buttons, so to speak.”
“I can still answer those [trading or investment] questions for clients, and I have more time to answer them,” Vognild said, noting that she has more bandwidth to discuss investment opportunities and overall market trends or changes with clients.
Research has found that more small RIA firms are exploring M&A opportunities than in prior years, according to insights published by BNY Mellon in December. In 2022, the wealth management industry saw a peak in M&A, with these transactions almost tripling compared to the prior 10-year period.
Retaining the Right Clients
Vognild says that throughout her team’s transition joining Focus Partners Wealth, they’ve retained the overwhelming majority of their clients.
And even in an instance when one client left in 2021, she understood that it just wasn’t a fit anymore.
“Sometimes there’s a temptation as an advisor to try to help everyone, and some clients may not actually be a fit for how you plan to run your practice,” Vognild said.
In this case, the client was looking for advisors who would make more short-term, or frequent, changes within their investment portfolio. That investment style did not align with her team’s core services, which involved setting longer-term portfolio targets for clients, Vognild explained.
“We aren’t going to actively go out and say, now is a perfect time to buy and sell this stock. Clients who want that should find those advisors,” she said.
Stick to Your Core Services, Values
When Vognild and her business partner (who retired in 2022) were considering M&A opportunities, they knew it was critical that the other firm’s culture aligned with theirs.
“There were people who tried to convince me, we could join their firm and help change their firm. But that would be fighting an uphill battle,” Vognild said. “It was best for us to find a firm that was already aligned culturally with us. For instance, we offer tax planning to all of our clients and build out their financial plans, so having a firm that already did that and wasn’t going to change things was critical.”
She notes that some advisory firms see comprehensive tax services, which include tax strategy as well as tax return preparation and filing for clients, as a liability. But they didn’t intend to compromise on their key services.
“It can be really easy to dismiss culture, but clients can tell if you do,” Vognild said.
“If someone is looking for a change [via M&A],” she continue, “look for a firm that’s doing it the way you want to do it.”
“Focus Partners even has a dedicated tax team now, at least partly, because we joined. And they wanted to do that,” she added.
When thinking about M&A, “trying to force somebody else to change is not going to go well,” Vognild said.
Danielle Walker is a freelance journalist with 15 years of business reporting experience. She previously worked at Business Insider and Pensions & Investments, among other business publications. Her work has been published in the Financial Times, Barron’s and Chief Investment Officer. Danielle is currently based in Norfolk, Virginia.
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Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives.
