The wealth management industry is currently facing a host of challenges, including margin compression, stagnant markets, salary inflation, and the impact of high-interest rates encouraging staying in cash. However, despite these headwinds, the long-term prospects for the industry remain promising. As a result, we are continuing to witness consolidation within the sector as firms seek economies of scale to enhance competitiveness. Our wealth management practice works with a broad range of wealth managers from family offices to financial advisers, and you can’t underestimate the critical role that a well-oiled integration team, acquisition process, and onboarding strategy play in the success of consolidation strategies.

One of the key success factors in wealth management consolidation is the formation of an effective integration team. This team should be composed of experienced professionals from both the acquiring and target firms, along with external advisors who can provide impartial guidance. Their primary responsibilities include cultural alignment, operational synergy, client transition, and talent retention. Cultural alignment and talent retention often go hand in hand, but further down the line these factors can also be influenced by proposition harmonisation. Buy in on proposition from client-facing teams early can will often ensure that key relationship managers don’t leave the newly acquired business.

The acquisition process itself is a complex endeavour, and careful planning is essential for a successful outcome. Due diligence is key, as it involves assessing the financial health, legal liabilities, and operational risks of the target firm. It’s amazing how many acquisitions are aborted early on in wealth management acquisitions due to vendors having their firm ready for sale. Regulatory compliance can be complex and take time, and target companies must be rigorously tested to ensure that they meet a firm’s long strategic goals - and that the acquirer can actually add value to the firm under consideration!

Finally, the onboarding process is where the rubber meets the road in wealth management consolidation. It involves the practical execution of the integration plan. Key considerations include client communication, employee training, operational integration, and ongoing monitoring.

Firms that succeed in this field have refined their process into a fine art. Individuals in acquisition teams have clearly defined roles with deal origination separated from integration, and they’ve found a repeatable process. This means that with funding in place, they can integrate deal after deal without placing their business under stress. The ideal scenario would be to appoint someone with an operational background with exposure to acquisitions, but with careful planning and clear carving out of responsibilities firms can embark on this route with existing teams. It does require a skills audit to understand what skills are needed, and what skills already exist in the business.

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