other advisors . When expectations — or , in many advisors ’ minds , “ promises ”— are not met , they may feel deceived or exploited . This , in turn , often leads to conflict . But beyond that problem , the expectations of the two advisor groups differed according to their motivations for selling . ( See Exhibit 4 ).
Those looking to exit the industry were more likely to be dissatisfied as a result of their final payout . ( Again , this number includes any earn-outs and client retention monies .) The advisors in this situation believed they deserved a higher final payout than they received .
When the advisors signed on for business growth instead , they were more likely to be dissatisfied if the buyer was unable to deliver the “ support ” or resources they said they would . For example , they might have been told they could connect with referring professionals from other fields to get new clients , but this didn ’ t happen . Or they were told they would have access to exceptional investment products , but these proved less than stellar . If they were unable to grow as expected and that led to a lower financial payout for their firm , that would cause them further grief .
Much less of a problem for these growth-oriented advisors , but still sources of unhappiness , were operational and compliance problems , disagreements about the strategic directions of their firms after the sale , or the emerging firm ’ s culture .
Brett Van Bortel , director of consulting with Invesco Global Consulting , ob-
EXHIBIT 1
Percentage Of Advisors Who Said They Were Satisfied Or Unsatisfied With A Sale Or Merger
■ Satisfied 51.1 %
■ Dissatisfied 48.9 %
N = 311 Advisors
EXHIBIT 2
Main Reasons An Advisor Said They Originally Sold Or Merged
■ To exit the industry 31.2 %
■ To grow their business 68.8 %
N = 311 Advisors serves , “ Aggregators must place a premium on accurate expectation-setting with recruited advisors . They need a clear , implementable strategy for organic growth and the resources and expertise to help advisors implement it . Without it , expectations become empty promises very quickly .”
Being Critical
Since more advisors are likely to sell or merge their practices in the coming years , it would serve them well to bring a critical eye to potential acquirers and merger partners . It ’ s easy to be enthralled by promises of big money and the prom-
EXHIBIT 3
Factors Leading To Deal Satisfaction , According To The Advisors ’ Reason For Selling
Factors They received promised “ support ” and resources . 29.60 % 93.30 % They received a certain level of total financial payout 98.10 % 76.20 % They faced few operational and compliance problems . 22.20 % 55.20 % They were happy with the new firm ’ s strategic direction . 16.70 % 50.50 % They found a cultural fit with the new firm . 13.00 % 49.50 % They didn ’ t confront personal conflict . 0.00 % 1.00 %
N = 159 Advisors
Cited By Those Who Had Wanted To Leave The Industry
Cited By Those Who Had Wanted To Grow Their Business
EXHIBIT 4
Factors That Caused Dissatisfaction With Deals According To The Advisor ’ s Original Reason For Selling
Factors There was a personal conflict . 97.70 % 97.20 % There was a lack of promised “ support ” and resources . 18.60 % 92.70 % They weren ’ t happy with the level of total financial payout . 100.00 % 40.40 % There were operational and compliance problems . 9.30 % 19.30 % There was a problem with the strategic direction . 11.60 % 14.70 % There was a culture clash . 2.30 % 16.50 %
N = 152 Advisors
Sources of unhappiness , were operational and compliance problems , disagreements about the strategic directions of their firms after the sale , or the emerging firm ’ s culture .
Cited By Those Who Had Wanted To Leave The Industry
Cited By Those Who Had Wanted To Grow Their Business
30 | FINANCIAL ADVISOR MAGAZINE | JANUARY / FEBRUARY 2024 WWW . FA-MAG . COM