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Using Acquisitions To Secure Talent

Over the past two years, several environmental pressures have forced advisors to change how they do business. The pandemic alone drove the industry to adopt remote work, virtual meetings, and new protocols to ensure safety while giving staff the flexibility to care for children home from school and to meet with clients virtually. The pressures of the pandemic have also spurred a major shift in the economy, causing what many have dubbed “The Great Resignation.” Financial Advisors had managed to stay ahead of this trend, thanks to the fact that many provide quality work environments, benefits, and opportunities for individuals looking for a rewarding career.

As other industries start to poach for employees, advisors are beginning to feel the pinch of a dwindling labor supply coupled with rising demand. Advisors are responding by increasing their recruiting efforts, investing in initiatives to drive diversity, continually evaluating benefits, and broadening the search for staff outside of the financial services industry. There is another strategy advisors can use to secure talent, and that is through acquisitions.

Traditionally acquisitions were used as a means of rapidly growing a client base and/or gaining a foothold in a specific niche or region. Sometimes this meant only purchasing the book of business, and not taking on any new staff or other business expenses. As practices have evolved, shifting away from a lifestyle business to a more traditional enterprise, advisors have learned to use acquisitions as a way to gain back-office capabilities, expand service offerings, and as a means of securing much needed talent in all levels and areas of the practice. “Sell and stay” scenarios have allowed practices to tap into the networks and experience of senior advisors, while mergers and other arrangements have provided practices with a built-in servicing advisor to cater to new clients or an executive who can drive specialty initiatives such as recruiting and referral relationships. Support staff are easily transitioned into the practice and help to smooth the transition for clients, leading to lower attrition rates and a better client experience. Overall, the attractiveness of acquisitions has become just as much about the operational side of the practice as the clients themselves and have allowed advisors to not only grow their revenue, but their capabilities as a business.

Currently, there is no end in sight for the Great Resignation. The pandemic has caused many individuals to evaluate their work and home lives and search for situations that better fit their needs and goals. Although this is causing turmoil in the short-term, in the long run this will lead to a better allocation of talent. Industries like the financial advisory sector, that have adapted to remote work and have enhanced and grown their cultures and employee benefits will come out ahead as the workforce continues to shuffle between sectors. M&A knowledge and services have also grown and will continue to provide advisors with options, while lenders such as ours continue to provide flexible sources of capital for acquiring not only new clients, but also the talent to serve them.