The Right Match Is More than Mere Numbers

Advisers are aging—and few have a succession plan, or even a grip on how to sell, merge or add to their practice, say the creators of RIA Match Concierge Consulting.

We have a demographic experience where registered investment advisers (RIAs), on average, are in their mid 50s, sole practitioners, without a succession plan, says Mary Ann Buchanan, chief executive and founder of RIA Match. “Seventy percent of advisers have no succession plan, and that’s the basis of what makes [RIA Match Concierge Consulting] so compelling,” she tells PLANADVISER. “The need is huge.”

Buying, selling, joining or merging with an advisory firm is a defining professional moment, points out Kathleen Asack, founder and principal of AmplifyRIA. “We understand the gravity of that decision and the impact it will likely have,” she says.

Of the many services and solutions available for advisers, Asack says, not one ties together all the resources in a coordinated fashion and also uses algorithmic matching to identify candidates that the consultant might not have turned up on his own.

In 2012, Buchanan launched RIA Match, a self-service platform designed to let advisers create their own profile in about 20 minutes, collecting 72 data points for a match on seven variables. But she found that a number of advisers asked for more service. “Quite often, the advisers don’t have the time or comfort level to facilitate the search themselves,” Buchanan says. “They were reaching out and saying, ‘Could you do this for me?’”

In response, Buchanan and Asack created the concierge business as an end-to-end matchmaking service for advisers looking to buy, sell, merge with another firm, join a firm or add positions. Where RIA Match is more of a for advisers, RIA Match Concierge Consulting is a full-service matchmaking resource that provides expert advice and white-glove service.

Concierge Consulting provides consultants who guide advisers through a process that helps them clarify their goals and create an action plan, balancing qualitative criteria and quantitative metrics to find matches.

Beyond the Numbers

Philosophy and culture are as important as the numbers, Buchanan believes. “It’s very easy to overlook the importance of both qualitative and quantitative factors,” she says. “Price valuation and deal terms are all important, but if the philosophy and culture are misaligned, the best-crafted deal will likely underperform— if it survives at all.”

A range of considerations need to be weighed, Asack says, to avoid a practice in which the partners don’t see eye to eye on the future, strategic vision of the firm or whether to concentrate on a specific market. “Perhaps they didn’t flesh it out, vet these issues in advance,” she tells PLANADVISER. The lack of consensus can lead to lost client relationships, affecting revenue and assets under management, and it might make it extremely difficult to attract new talent.

According to Buchanan, mismatches are common, but no one has tracked what deals fail because of philosophy and culture.

The two decided to put quantifiable metrics around these less tangible characteristics, Buchanan says, in an attempt to describe missteps in deals that did not materialize, or that did not realize the full potential the partners had hoped for. They asked partners what they wish they had done differently and tracked the top responses.

The first step, Asack says, is helping the adviser crystalize what he is trying to accomplish, and why. “We have to start there,” she says. “If he wants to fetch the highest dollar amount possible, that is OK, but we need to set expectations and embark on a search that would mirror his goal.”

The adviser who wants something more meaningful than a simple purchase price needs to detail personalities and qualities: what Asack calls important personal and professional values. “What is his future vision for this business?” she asks.

Visualizing the Future

Some may want to create a greater asset, to maximize or establish a legacy. It’s common to overlook a number of qualitative attributes when initiating this process, according to Asack. “By the time you get to the numbers, the deal and the adviser are simply wrapped in the numbers,” she observes.

Advises need to be able to visualize where they want to go, Buchanan says. If they don’t identify that, they are never going to get there. That end vision should include an assessment of their own value and their place in the future partnership. Do they want to sell and go, or sell and stay? It is similar to buttoning your shirt, she explains. If the button hole and the button are not aligned from the start, it’s not going to look right.

Similar to looking for a date, Asack recommends that advisers give serious thought to the qualities they seek in an ideal partner from the perspective of both personality and business. Last, they must assess the health of their own business. “If there are financials or personnel changes that need to be addressed, they want to do that in advance,” Asack says. “They need to be reminded that the one joining is going to be scrutinizing them.”

Buchanan and Asack offer a combined tech platform and mergers and acquisitions (M&A) consulting, coupled with a deep understanding of the complexity of the independent advisory community. The two maintain their new service provides the expertise and guidance needed for rewarding and enduring outcomes. The technology supports the scale needed to host a strong pool of top RIA firms, while consulting experts navigate the engagement from initial introduction to completion.

Their profiling process can capture certain elements of a business, to help determine from a pool of candidates those who specialize in the Employee Retirement Income Security Act (ERISA) or 401(k) plans. “We’re still using a human to vet and provide insight, but the technology can sort options,” Asack notes.

The primary compensation is derived from a success fee after a nominal engagement fee. “We ask them to have some skin in the game,” Asack explains. “We believe it’s essential for success as it shows a motivated, engaged candidate.”

RIA Match Concierge Consulting is available to financial advisers of any size and from any channel. More information about the service is on the website of RIA Match.