More Advisors Breaking Away to Serve Retirees: CEO

To address the issue, Tenney leans on his executive leadership team to develop and deepen the perspective about what new opportunities to pursue and when. He specifically credits the firm's president and chief financial officer, Helen Andreoli, for her ability to help put new opportunities in their proper context.

"Another key to our approach is that we have formalized a long-term vision that gives us a sense of direction in terms of where we want to be in eight or 10 years," Tenney says. "This longer-term outlook is complemented by additional three-year and one-year goals. These plans are all interrelated, so it gives us a clear pathway forward."

An Anecdotal or Demonstrable Trend?

The breakaway dynamics described by Tenney are explored in Echelon Partners' latest RIA M&A Deal Report. The report offers some data to contextualize the firm leader's anecdotal experience, showing wealth management deal activity defied 2022's global slowdown in mergers and acquisitions.

Despite challenging macroeconomic conditions, buyer competition remained high, and consolidators continued to deploy capital throughout the last year, buoying both transaction volumes and valuations. By the end of 2022, the wealth management sector managed to avoid the broader M&A market slowdown, which was driven by rising interest rates, geopolitical uncertainty and tightening monetary policy.

Echelon's report emphasizes Tenney's point about the growing importance of platforms like Dynasty Financial Partners and its peer organizations. As the report spells out, the increase in the number of platforms across the wealth management industry has created a dynamic where private equity-backed firms are seeking to expand their offerings by acquiring smaller firms that can be strategically integrated into their existing platform, in turn boosting demand for add-on acquisitions.

As part of a larger, more established platform, sellers can tap into a wider range of resources, technology, expertise and access to capital, Echelon reports. This allows breakaway advisors to effectively bolster their competitive position in the wealth management marketplace and rapidly expand their business in ways that would be difficult to achieve with a traditional approach to independence.

Looking to 2023 and beyond, the Echelon report estimates it is likely that this trend will continue to shape the wealth management landscape for years to come.

How to Serve Retirement Clients Well

Reflecting on his own firm's process, Tenney says the key part of the service model is ongoing one-on-one education and deep planning sessions with clients.

"It all starts with a deep discovery meeting where we explore and learn about their values, history, hopes, challenges, relationships and resources," Tenney says. "This discovery serves as the foundation for our ongoing relationship and allows us to educate the clients in a manner that is specifically tailored to their needs. The timing of these discussions can start decades before retirement and get more specific as the retirement date approaches."

When preparing to retire, Tenney says, it is common for clients to underestimate all of the issues they should address. For example, for those who sold a business, they now need to pay for expenses that used to be covered by the business. Just as important is the tendency for clients to struggle emotionally as they try to define their new identity and where they should spend their time.

"For many years their identity was wrapped up in their job or their business," Tenney says. "For most people, just stepping away and spending more time golfing is not the answer. We can help our clients craft both the financial and the personal picture as they enter retirement."

With respect to building the actual retirement income plan, Tenney says, most retirees feel perfectly comfortable with leaving the distribution methodology to the firm. In building the spending plans, the firm looks primarily at the tax efficiency of distributions and long-term objectives.

"Taking the minimum from retirement accounts often makes sense as a starting point, although more sophisticated approaches are often in order," Tenney says. "For example, one client we recently worked with agreed to liquidate their Roth IRAs due to the tax-free distribution. This, in turn, allowed their taxable unrealized gains to remain untouched."

(Pictured: Steven Tenney)