Here are eight key takeaways fromtwo sessions:
1. A flood of strong buyers is
“There are more buyers today thanthere ever have been and more capablebuyers, and so when you have manyseeking few there’s a natural tendencyfor price to go up,” said Jon Beatty, COOof Schwab Advisor Services.
The “quality of buyers” is driving rising valuations, because the firms buyingtoday are “well-run organizations” thathave “continued to evolve” and are more“sophisticated” than they were severalyears ago, according to David DeVoe,founder and CEO of DeVoe & Co.
2. Practice owners should start
Executives who spoke agreed on theneed for advisory practice owners tostart succession planning before healthemergencies and other issues happen.
Many are afraid they won’t be
3. Do an internal assessment
involved anymore if they sell, said Tim
Kochis, a special advisor at DeVoe & Co.:
“People can work much later” into their
lives today than they could in years past,
but that doesn’t mean they can’t migrate
leadership and management respon-
sibilities to others at the firm while
they’re still active.”
Brian Hamburger, founder, president
and CEO of MarketCounsel, pointed out:
“Those conversations never get easier.”
before a purchase.
Many owners of advisory firms thinkthey want to acquire another firm, butdecide against it after finding the process overwhelming and too complicated,says DeVoe.
Start out by conducting an inter-
4. Smaller firms don’t have to
nal assessment, he explains, and asking
if your organic growth is strong: “If
you’re pretty good at that, … it might be
better to invest more and more energy
invest in expensive tech.
Small and midsize firms can thrivewithout access to artificial intelligence,big data and other tech tools rightnow, according to Kochis, who noted:“Technology will become, as has alwaysbeen the case … less and less expensive. It will become ubiquitous, availablefrom lots of different sources. The custodians will come into play to provide alot of that functionality to their clients.”
Five years from now, almost all advisors will have the tech capabilities of thelarger firms, he predicted. “Tim is absolutely right,” said Beatty, adding: “Thecost of that [tech] will come down. Justlike any moon shot, the technology getscheaper when it comes to the consumerso there will be a trickle-down effect,for sure.”
5. The pandemic may have
“Ten years ago … this pandemic mighthave had a much more substantialimpact — a negative impact — on theindependent wealth management space,given our lack of readiness to deployremotely and the lack of professionalmanagement across the entire industry,”explained Hamburger.
To Beatty, the “lasting implicationhere is it’s taught us a lot of new tricks… [like] how to operate in a virtualenvironment [and] how to work withclients this way.” Also, “I’ve heard manyadvisory firms say ‘I now have a national footprint’ and don’t need to haveoffices in, let’s say, Chicago and Denver,to have a presence in those marketsanymore,” he added, which could meanlong-term cost savings from not havingoffices or commuting.
6. Diversity should be a priority.“One thing that I hope is a focus nextyear, because it’s becoming a reallyurgent issue for our profession and forour industry, … is diversity,” accordingto Kochis.
“We will have to go out of our way toexpand the diversity of our workforceswith gender, color and ethnicity so welook much more like the market” thatthis industry serves, he said. “It’s notonly the right thing to do. It’s the smartthing to do.”
7. Don’t worry too much about
“The biggest threat to the industry isFAANG … organizations potentiallyentering our space,” DeVoe said, referring to Facebook, Amazon, Apple,Netflix and Google.
Traditional advisors are being chal-
8. There’s much to be
lenged by the “robo threat in some
form or fashion,” he said. But, the
threat of “a $100 million robo-advisor”
pales in comparison to the tech giants,
who use AI and big data, “and that’s a
Hopefully it won’t be an issue for
the next five to 10 years, Devoe stated:
“But if and when that aircraft carrier
turns in this direction, they’re going
to have a lot of artillery pointed at
Despite the challenges of 2020, “I’m asexcited about the growth prospects forour industry as I have ever been in 23years in this industry,” Dave Welling,CEO of Mercer Advisors, said.
“Me. too,” replied Ben Harrison,managing director and head of AdvisorSolutions at BNY Mellon | Pershing.
Jeff Berman can be reached at firstname.lastname@example.org.