COVER STORY inform and likely scare the living daylights out of people , successful managers will instead help them manage the risks .
8 . Successful firms will be aggressive in expanding their value propositions .
If you want to succeed , you ’ ll tell prospects ( and the clients of competing advisors ) to look more closely at the AUM fees they ’ re paying and what they ’ re getting for those fees — and then to demand more value for their money . Your proposition is that you can do more for clients for the same money , distinguishing your offering and capturing greater market share .
Savvy smaller organizations will respond by developing specialties for the problems facing narrow groups of specific clients in their geographic regions . Rather than just helping clients manage their wealth , they ’ ll want to play a much larger role in helping them create and build it .
9 . Successful firms will be much more sophisticated and discriminating buyers and sellers .
The most successful industry participants will be discriminating and sophisticated when it comes to buying and selling firms . Acquirers will focus on only those opportunities fitting their overall
Savvy smaller organizations will respond by developing specialties for the problems facing narrow groups of specific clients in their geographic regions . strategy , deals that create more value than just the amount paid at closing .
Buyers should build relationships with prospective sellers long before they come to market . They should also understand the perspectives and objectives of each of the seller ’ s employees and be well positioned to address everyone ’ s concerns .
Sophisticated sellers will likewise invest a great deal of time identifying and learning about prospective buyers . They will study the incentives of each buyer ’ s backers , research the acquirer ’ s prior acquisitions , and determine how the buyer interacts with the seller ’ s affiliates .
More importantly , astute sellers will prepare their firms for a transaction long before they come to market . They will try to pre-emptively address potential buyer concerns .
These sellers will also demand much greater value from their bankers . In many prior transactions , bankers were paid immense amounts of money to be glorified auctioneers . The sellers will demand that their potential bankers educate and prepare them for a potential transaction .
10 . The managers at successful firms will have the necessary skills , temperament and expertise to execute .
Lastly , only those organizations whose managers boast the necessary skills , temperament and expertise to execute — in what will be a very different future operating environment — will join the ranks of the most successful . Their owners will quickly determine whether current managers — regardless of how successful they were in the past — have the skills and abilities to lead the businesses in the future .
Successful firms will be led by business operators — individuals who are passionate about the dayto-day details of running a wealth manager — with personalities that are a cross between Mary Poppins and Attila the Hun . They ’ ll need the patience to renegotiate agreements with many key employees , and the decisiveness to know who should be let go . They will have to build brands and sub-brands . And they must be effective recruiters , who at the same time can effectively manage their firms ’ owners .
Unfortunately , many successful firms were largely built through acquisitions , led by individuals with great vision who took a great deal of risk . However , not all of these people will be successful at building future enterprise value over many years .
MARK HURLEY is the CEO of Digital Privacy & Protection . This article is excerpted from the new white paper , “ Welcome to the Jungle — The Next Phase of the Evolution of the Wealth Management Industry ,” which can be downloaded for free from www . dpripro . com .
42 | FINANCIAL ADVISOR MAGAZINE | DECEMBER 2023 WWW . FA-MAG . COM