How to Make Technology Part of Your M&A Strategy

When technology's benefits are discussed with advisors, they are most often framed as a way to maximize your staff's efficiency, lower costs and improve the client experience. In fact, I wrote about how you can improve the client experience and create "wow" moments for your clients using your technology in the first article in this series.

If you have made investments in your technology, those improvements can help beyond upgrading your service to clients; you can also be bold and take advantage of what you have when it comes to attracting new advisors to bolster your firm's growth strategy.

Growth through mergers or acquisitions is a viable option for advisory firms that have built a technology platform to support continued growth. You don't need a billion dollars under management to attract a breakaway, but you do need a plan for how to use your technology to show why they should choose your firm.

The Value of Integrated and Institutionalized Systems

Most advisors didn't get into this business to become the master of their back-office systems, so the technology investments you have already made are of value to other advisors.

While many advisors underestimate what it takes to build out their firm, even more underestimate the value they can bring to other advisory firms when they have already created those institutionalized processes.

There is an advantage to the practice you have built because it allows you to leverage your entire company. All your processes and workflows that dictate how your firm operates, and the day-to-day inner workings of your firm, are valuable to advisors who may be potential acquisition prospects.

Here's one example: Your technology allows you to create a package you can easily offer to breakaway opportunities. When an advisor leaves a wirehouse, there are many elements of running a business to be explored outside of all the technology they need to select to run a truly modern office. Offering them a fully built-out technology platform could be the advantage that gives you a leg up to bring them onboard with your firm.

Ways to Prepare Your Firm to Use Technology for Acquisitions

Using your technology solutions as a method to find and acquire new talent is, of course, only as viable as the technology you have in place.

To help you remedy any shortcomings, I have a few simple recommendations for ways your firm can always put your best digital foot forward:

Designate or add a "tech evangelist" at your firm to make sure technology is being integrated to its fullest potential. This person's role will be to increase internal buy-in when you implement a new tech solution, and to make sure that your tech is serving your office's needs.
Conduct annual system checks on your chosen vendors so you are constantly comparing them to ensure they still fit your needs.
Keep your staff up to date on systems training and take advantage of any online courses or conferences your vendors may offer.

At a minimum, you should create integrated workflows between your CRM, portfolio accounting, financial planning and all other fintech solutions, and keep them working seamlessly year after year.

The benefits of scalable infrastructure should not be overlooked. Think of all the work and hours it took your team to build what you have; now you can sell your vision to a new breakaway advisor or even an established firm since you've done the heavy lifting.

Getting Creative to Drive Growth

Going beyond the standard merger template could also yield some advantageous situations by means of more creative arrangements. Looking outside our industry for a moment, I spoke with a small grocery store owner who goes in with other similarly sized grocery owners to share a warehouse and couple their stock for more buying power.

In a similar way, advisors may want to consider creating something of a co-op or a buy-sell agreement, where both firms continue to operate as separate firms, but collate their AUM and accounts for additional leverage.

It is possible for you to use the technology you have effectively implemented as an opportunity to drive further growth through mergers, acquisitions or other creative arrangements to leverage the scale you now have.

— Read Brisk Asset Management Firm M&A Activity to Continue in '17: Casey Quirk on ThinkAdvisor.