Powering Relationships in Wealth Management through M&A

Hue Partners is proud to share the Spring M&A Confidential article authored by Adrian Johnstone, CEO of Practifi.

Wealth management is ever-changing, and the only constant is the ability to build and maintain relationships. In the era of AI and rapidly evolving technology, these relationship skills are more crucial than ever. As RIA founders navigate the complexities of their businesses, particularly in the context of M&A, they must focus on three key areas: understanding client aspirations, fostering internal relationships, and embracing change as a journey rather than a destination.

Understanding Client Aspirations

The foundation of wealth management lies in understanding the unique aspirations of each client. My perspective has always been that the primary goal of an advisor—regardless of their affiliation—is to comprehend their clients’ dreams and work diligently to help realize them. This perspective aligns with how the industry has significantly shifted in the last decade, moving away from a purely investment-centric approach to one that emphasizes relationships and holistic planning.

In the context of M&A, understanding client aspirations becomes even more critical. When firms merge or acquire another, they often inherit a client base that has its own distinct needs and expectations. As RIA founders, it is essential to cultivate a culture that values these aspirations during transitions. By actively engaging with clients to understand their goals and concerns, they can ensure a smoother integration process and maintain client trust.

Moreover, the merging of client bases presents an opportunity to enhance service offerings. By leveraging the combined expertise and resources of both firms, advisors can provide more tailored solutions that resonate with clients’ aspirations. This not only drives business success but also uplifts the entire community, as more individuals gain access to the advice they need.

Fostering Internal Relationships

While external client relationships are vital, the internal relationships within a firm are equally important, especially during M&A. I have always emphasized the necessity of nurturing connections between advisors, servicing teams, and operational staff. Without these relationships, the machinery of a firm can become clogged, hindering overall performance and jeopardizing the success of the acquisition.

During the integration phase following an acquisition, collaboration is vital. Advisors must work closely with their operations and compliance teams to ensure that every client's journey is seamless. When these internal relationships are strong, firms can deliver exceptional service, which ultimately benefits clients.

Moreover, fostering a culture of collaboration and knowledge sharing can enhance the overall client experience during M&A. When team members understand each other’s roles and appreciate the challenges they face, they can better support one another in serving clients. This approach not only streamlines operations but also creates a more cohesive and motivated team, which is essential for navigating the complexities of a merger.

My initiative, “A Seat at the Table,” exemplifies this philosophy. By creating a space for open dialogue amongst our clients and team members, I emphasize the importance of shared experiences and collective problem-solving. This initiative not only builds community but also empowers RIA leaders to share insights and strategies, ultimately leading to better outcomes for clients during transitions.

Embracing Change as a Journey

Change is an inevitable part of the wealth management landscape, particularly in the context of M&A, where firms undergo significant transformations. However, I believe that change should be viewed as a journey rather than a series of isolated events.

When firms merge or acquire another, it is crucial to communicate the “why” behind these decisions. Clients and team members alike need to understand the vision driving the change to foster trust and commitment. As I often say, “You can’t do change to someone; it’s a two-way street.” By involving team members in the process and encouraging their input, we can create a sense of ownership and alignment that is essential for successful integration.

The importance of relationships cannot be overstated during times of change. The real work begins after a merger or acquisition, where blending teams and cultures requires intentional effort. By investing time in building connections and understanding the human side of change, RIAs can navigate transitions more smoothly and create a more positive experience for everyone involved.

Moreover, leveraging technology effectively can enhance the change process during M&A. By using CRM systems to capture and analyze data, firms can identify gaps in knowledge and streamline communication, allowing teams to focus on high-value tasks that drive client satisfaction. This technological empowerment, combined with a people-first approach, can significantly enhance the effectiveness of change initiatives during mergers.

A Human-First Future

RIA founders must prioritize the human element of their businesses, especially in the context of M&A. By understanding client aspirations, fostering internal relationships, and embracing change as a journey, we can create a culture that not only drives success but also inspires and uplifts everyone involved.

As the industry continues to transform, the ability to build meaningful connections will be the differentiator that sets successful firms apart. By focusing on relationships—both with clients and within the team—RIAs can navigate the complexities of the wealth management landscape with confidence and purpose.

Ultimately, it is through these relationships that the true value of wealth management is realized, creating a positive impact not only for clients but for the entire community. We must remember that it is the people we serve and the connections we build that truly define our success, particularly during the transformative processes of mergers and acquisitions.