PFI Advisors Releases New Industry Report: “Becoming a Professional Buyer: Harnessing RIA M&A Strategies for Growth”

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Report identifies the top 7 strategies leading RIAs are deploying for inorganic growth; Profiles 4 successful RIA acquirers including Savant Capital, Summit Trail, Osborne Partners and Angeles Wealth

The report identifies the most important strategies leading RIA firms are developing to take advantage of opportunities being created in the wealth management industry.

PFI Advisors (“Pure Financial Independence”) today announced the release of a new industry report on one of the top strategic issues facing independent RIAs: How to leverage M&A activities to turbocharge growth in a consolidating industry.

The report. “Becoming a Professional Buyer: Harnessing RIA M&A Strategies for Growth” identifies the most important strategies and characteristics leading RIA firms are developing to take advantage of opportunities being created by macro changes in the wealth management industry. The report also features profiles of 4 successful, multi-billion dollar RIA serial acquirers, based on interviews with senior executives, including Savant Capital Management, Angeles Wealth Management, Osborne Partners Capital Management, and Summit Trail Advisors.

“Advisors are frequently asking us for help in building the right strategy and infrastructure to be able to successfully engage in M&A activities to grow their firms,” said Matt Sonnen, CEO of PFI Advisors. “In our role as ‘hands on’ operations consultants and not recruiters, we help firms establish their new RIAs and respond to their growth challenges, so we have a unique perspective on how to integrate RIA acquisitions, post deal close.”

“From that perspective, we are seeing that many aspirational firms who are looking to become a ‘buyer of choice,’ don’t truly understand or are prepared for the complexities involved in doing deals, integrating the two firms, and realizing the desired synergies. To shed light on this subject and to provide a business management resource for RIAs, we sought out the top firms in the industry who had experience and expertise in M&A to identify the key areas firms need to develop before embarking on inorganic growth strategies.”

According to the report, current “mega trends” are impacting the wealth management industry such as aging advisors, changing client service expectations, new, low-cost, online competition, more strict regulatory requirements and an overall increase in the cost of doing business which is putting pressure on firms to achieve scale in order to remain profitable. These factors are accelerating the consolidation trend in the wealth management space, leading to opportunities for savvy buyers to acquire firms looking to exit or join forces with another firm to gain needed scale.

But in order to capitalize on the consolidation movement, RIAs need to up their technology investments, management capacity, communication skills and operational infrastructure in order to succeed.

Based on interviews with leading firms, skilled and experienced in M&A activities, RIAs need to have developed 7 key capabilities, including:

  •     A compelling value proposition
  •     Technology and operational expertise
  •     Multi-disciplined leadership team
  •     Management capacity for deals
  •     Transparent compensation structure
  •     Strong, defined culture
  •     Transition support

“If you are a small firm doing it all on your own, you are a ‘jack of all trades and master of none,’” notes Brent Brodeski, CEO of Savant Capital Management in describing the opportunity for RIAs to capture additional AUM. “At Savant, we have a whole lot of ‘masters’ that are there to support client-facing advisors.” Additional value proposition messaging advice comes from Jack Peterson, managing director of Summit Trail Advisors when going after employee-based advisors. “Wirehouse advisors are stuck with outdated technology – we are big believers in using technology to drive productivity and enhance the client experience.”

“We are extremely grateful to the advisory firms who supported this research effort and are very pleased to be able to offer the industry this unique opportunity to benefit from their advice and guidance,” Sonnen said.

To read the full report, log onto http://www.pfiadvisors.com.

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About PFI Advisors

“Pure Financial Independence.”

PFI Advisors, LLC (“Pure Financial Independence”) was founded in 2015 with the following mission in mind: “To further evolve the RIA industry from a collection of practices to businesses, and to be a continued voice in validating the industry as a legitimate landing spot for billion-dollar teams and their clients.” PFI Advisors is pioneering an operational consulting service that supports the unique back-office, technology and operational needs of RIAs in growth mode. The firm conducts Technology Assessments, manages Technology Conversions and provides M&A Preparation and Integration Services. For breakaway advisors, PFI Advisors manages full RIA set up and transition to Independence, including office build-out, RIA infrastructure, client transition, and billing services, all for a simple consulting fee. There is no complicated, long-term AUM fee structure or equity stake required to build the firm’s future and provide advisors Pure Financial Independence.

About Matt Sonnen
Prior to founding PFI Advisors, Matt Sonnen learned the ins and outs of the wirehouse model at Merrill Lynch in the late '90s. After leaving Merrill in 2005, he was introduced to the RIA marketplace a few years later when he helped build the infrastructure for Luminous Capital prior to their founding in 2008. As COO and CCO at Luminous, he navigated the technology and compliance challenges as the firm grew from $1.7 billion in assets to nearly $6 billion in less than five years. Luminous Capital sold to First Republic Bank for more than $100 million in 2012, after which Matt headed to Focus Financial Partners in New York City. There, he helped breakaway teams and recently-formed RIAs develop strategic initiatives to benefit from best practices, streamline operations, and improve efficiency before heading back to California to launch PFI Advisors with his wife and business partner.

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Timothy Welsh
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