In some large markets, such as New York City, the critical mass is $10 million, he said.
Simple demographics are also driving the merger talk. The average financial advisor in the U.S. is in his or her 50s, a time when they would be expected to lay plans to transition their practices, he notes.
At the same time, trillions of dollars in wealth is transitioning over to a younger client base that, according to various studies, is more inclined to work with younger advisors.
Clients are commonly about the same age as their advisors or older rather than younger, Tibergien added.
“They want people who can relate to where they are,” he said, “not another father or mother figure.”
That means advisors need to bring on younger advisors and work as a team to go after inheritors and creators of wealth under the age of 45, Tibergien said. It’s a key to growth because the data indicates people under 45 hold as much in investable assets as those who are older.
The entire industry is struggling with this demographic shift in wealth, he added, because advisors have been focused on baby boomers for so many years.
“This is a business fundamentally built for and by boomers,” he said. “But it’s not an infinite asset. It’s a depleting oil well.”
There’s been a lot of talk about how advisors need to embrace social media to reach out to these young clients, but Tibergien said older advisors need to do more than set up a Twitter account if they want to thrive.
“Technology has a role, but it’s one that abets the way you do business rather than defines the way you do business,” he said.