As the wealth management industry experiences a period of unprecedented consolidation, we continue to see a fixation on “transactions” and “deals.” While these are milestones to be celebrated, it’s also an opportunity to reflect on the road ahead. What happens after the ink is dry? What constitutes a successful, sustainable partnership?
At Mercer Advisors, we’ve had the honor of partnering with over 100 firms since launching our mergers and acquisitions strategy in 2016. The success, struggles and learnings of those partnerships have left us with a clear view that the accurate measure of success is the enduring value it creates for the firm’s clients, owners and teams. Here are some learnings from our journey.
The numbers matter, but is that all?
When we meet with a firm that is interested in a potential partnership, the first thing we want to understand is “what are they solving for?” If the partners are merely seeking a financial transaction, we’re unlikely to be the best fit.
Partnerships have the best opportunity for a superior outcome when the firm’s leaders express a desire to find ways to serve clients better, provide more opportunities for their team and support future organic growth. We also want to understand what they feel makes them unique—how they have been successful to date. When we spend time in these discussions to create a shared, clear vision of the value we can deliver together, only then can the magic happen.
What’s in it for the clients?
For clients, the change should feel like a significant upgrade. A partnership should unlock a new tier of services and expertise that a standalone firm, regardless of its success, would find challenging to deliver on its own.
In parallel with rapid industry consolidation, we are witnessing a significant expansion in the services suite that larger RIA platforms are offering. In the late 1980s and 1990s, many firms cited portfolio management and financial planning as key differentiators.
Today, many firms have expanded their services to offer a fully holistic approach, bundling tax, estate, insurance, trust, and other planning services as part of their core service offerings for high-net-worth clients. Partnerships mean that clients suddenly have direct access to a deep bench of credentialed professionals in these expanded areas. This eliminates the friction of coordinating with multiple outside professionals and ensures that every aspect of their financial life works in concert.
Here are some key questions to aid in understanding how these functions are staffed and supported, to ensure there is sufficient capacity and expertise:
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How long has the firm been providing the services to clients?
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Are the services provided by the potential partner’s employees or outsourced to a third party?
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How broad is adoption of these services? How are the clients charged for these services?
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Are there any internal chargebacks for advisors to access services on behalf of clients?
How does the team benefit?
One of the most impactful things you can do to create opportunities for your team is to lay the groundwork for a growing, thriving organization. A growing enterprise unlocks significant opportunities for professional development and career advancement. Within a larger, integrated firm, team members gain access to new career paths, mentorship opportunities, the ability to specialize in areas of interest and a clear path for growth. This can help attract top talent and retain dedicated team members who have been instrumental to the firm’s success.
Broad-based employee ownership is the key to sustaining growth and a client-centric culture. The most forward-thinking RIA models are built on a culture of ownership, intentionally extending equity participation beyond the founders or principals.
When employees become owners, their mindset shifts, and they become more invested in the success of their colleagues and in the experience delivered to clients. This fosters a powerful, collaborative environment where everyone has a vested interest in the firm’s mission. Silos break down, and a sense of shared purpose emerges—transforming a collection of individual roles into a unified, high-functioning team.
Owners gain scale and maintain autonomy
For principals, a partnership should catalyze growth and impact, not an exit strategy that relinquishes their voice and vision. Many firm owners rightly fear losing their autonomy. Yet the most effective partnerships reframe this concern, asking a more powerful question: “How can we empower advisors to serve their clients better while growing?”
The answer lies in a model that allows a firm to maintain its unique culture and client-facing identity, while benefiting from the collaborative power and specialized resources of a larger enterprise. Owners can maintain their autonomy while gaining enterprise scale.
A critical component of this is the opportunity for principals to remain owners and co-architects of their future. By taking a portion of the transaction in equity, partners realize the value of the business they built and also participate in the multiplied value of the combined enterprise. This model aligns incentives and ensures that advisors are invested in creating a better firm.
Building a future together
Consolidation is likely to continue, and the future will belong to those who build an orchestra, not a one-person band. It will belong to the firms that can serve more families, in more markets, with greater depth—without compromising the quality of client care or the firm’s core culture. For independent advisors seeking to solve for succession, scale, or the next phase of growth, the path forward doesn’t require sacrificing their identity.
By honoring their legacies, empowering their teams and uniting around a shared vision, firms can position themselves for enduring success. The goal isn’t to be the largest firm, but to come together to build a better, more unified one.