Advisors looking to build up their practices can make it happen in two ways: organically or by purchasing clients.
Although growing organically is typically a cheaper way to secure business, it can take time and a lot of effort. It also involves marketing, which can sometimes be hit or miss.
But what if an advisor approached the growth of a practice like a Fortune 500 company and focused on mergers and acquisitions? Many large registered investment advisors in the industry are doing this and “rolling up” firms into their existing structure, but it can also be an option for smaller RIAs.
Readily Available Resources
This idea is not new, as practices of various sizes are doing this already. Companies in the industry are set up to facilitate the buying and selling of RIAs, providing services as basic as a directory of companies for sale, all the way up to consultants who can facilitate the entire process.
The “wheel has already been invented” for this approach, making some of the work already completed.
Finding Organic Opportunities
Although search companies can facilitate this process, it can be better finding opportunities through one’s own network.
By talking to other advisors in membership groups, networking at conferences and on social-media platforms, advisors hear about others who are selling or know someone who is. By getting to know the advisor first in a non-threatening situation, it can eliminate those with whom there isn’t a personality fit.
Merging Is Another Option
It goes without saying that M&A isn’t all about the numbers and bottom line but needs to be a meeting of minds, philosophy and client make-up. This is even more so if a merger is the desired option and not an outright purchase.
Advisors who go from running their own practices to jointly running larger ones have to know how their partners operate, what communication styles work best, and that each owner has the same, unified vision for the firm.
It is helpful knowing that clients still get to work with the client they originally sought out, unlike a purchase, so that there is a smaller chance of client attrition. The merger itself may even boost company growth due to the fact that a larger team is in place to serve clients, one that now has a wider skill set and knowledge base.
Those looking for growth this year may find that marketing needs to take a back seat to buying another practice.
Dave Grant, a Financial Planning columnist, is founder of Finance for Teachers, a planning firm, and Finance for Teachers Network in Cary, Ill. He is also the founder of NAPFA Genesis, a networking group for young, fee-only planners. Follow him on Twitter at
This story is part of a 30-day series smart ways to grow your practice.
