They saw some competitive advantages in being a larger firm. They had common approaches toward investment management and financial planning. They treated their staffs in a similar way. They agreed on a timeline. They got the deal breakers on the table up front.

Those were some reasons that two fee-only registered investment advisory firms-Modera Wealth Management of Westwood, N.J., and Back Bay Financial Group of Boston-merged into a nearly $1 billion advisory firm on January 1.

The new RIA, Modera Wealth Management LLC, is keeping both its offices. Its 28 staff members include five principals who each have an equal vote as members of an executive committee that runs the firm. "We wanted to do it that way out of respect for all of us as founding members and also not to have the outside world think of us in terms of a hierarchy," says Robert D. Siefert, a Back Bay founder and Modera principal.

The predecessor firms didn't need to merge to survive-in fact both RIAs were doing very well and would have continued to prosper alone. "But the more we looked at it, we saw that one plus one could equal three or four," says Thomas Orecchio, another of Modera's five principals and a founder of the New Jersey RIA. The other three Modera principals are John H. LeBlanc, Greg Plechner and Mark A. Willoughby.

Siefert says the merger wasn't done to cut costs. But by bringing the two firms' respective technology and skills together, they could grow more effectively and add fewer new staff members than they would have had they remained separate. Also, a larger independent full-service firm might attract more higher-net-worth individuals and nonprofit institutions as clients, two customer groups both firms already served.

"When we are in competitive situations with the private banks of the world and the Goldmans of the world, sometimes the independent channel is not necessarily seen as advantageous because it's not big enough or legitimate enough," says Siefert. "I think we start to break that down as we come together, and I think our challenge and our determination is that we're going to take advantage of our size in these marketing efforts. But we're not going to compromise our practice standards. We want to remain very personalized."

What really made the principals think the merger could be successful was that the two firms had many similarities. "I'd say the first two items that made me believe it could work was that we had common approaches to investment management and financial planning," Orecchio says.

Both firms employed similar asset allocation strategies, primarily using passive mutual funds and ETFs for clients' traditional stock and bond holdings, and as a combined RIA they have agreed upon one investment policy statement for use across the firm. They already were using some of the same planning and investment platforms: NaviPlan and Zephyr. Both RIAs were mid-size firms-Back Bay with about $350 million under management and an average client relationship of about $1.6 million, and Modera with $560 million and an average client relationship of about $2 million.

The firms also had similar cultures and approaches with their staff-their offices didn't have an extremely corporate environment and employees were given latitude to make some decisions. It also helped that Orecchio and Siefert had known each other for 15 years and participated in professional study groups together for the last eight.

Still, it took two years of the principals talking together to hammer out a deal that worked for all the owners. "Each individual had a different sense of what might be a nonnegotiable or a deal breaker, and what was amazing was that it was rare that all of the owners had the same nonnegotiable that had to be ironed out," Siefert remembers.

The name of the new firm was one such issue. Orecchio's firm had changed its name two years earlier from Greenbaum and Orecchio to Modera, which in Latin means management and direction. "We went through 67 different iterations of names. Every star, every navigation tool, every compass was taken. We wanted to go with something completely different," Orecchio says.

"Surprisingly," says Siefert," it was not a deal breaker for us because we saw ourselves as going into a regional firm and as not being able to justify holding on to the Back Bay name ... and that was a deal breaker for them, and we were the ones who took it off the table."

Personality differences could have nixed the deal, too. Some principals at one firm didn't know those at the other firm very well, or at all. "We wanted to take the time to really get to know each other and make sure we're going to be happy working together. All the business issues aside, that to some was even more important than anything that was more tangible from a business perspective," Siefert adds.

Another big issue was location, Orecchio recalls. Would it be beneficial for the firm to have an office in New Jersey and one in Boston? If the two firms had been, say, 20 minutes apart, the firm could have saved money by operating the business from only one location, he says. The principals decided two offices was workable, and are planning to visit each other six to eight times a year to build teams and so the staff gets comfortable with each other, he added.

Another advantage of bringing the two firms together has meant both offices now have more in-house expertise. The Boston office already had an attorney on staff and the New Jersey office had an enrolled agent and foreign-designated CPA. "So from Boston's perspective we can take more advantage of the tax experience in New Jersey, and they can take much more advantage of the estate and compliance, the legal expertise in Boston. Now those resources are the resources of the firm," Siefert says.

Siefert provided an example of how this has already come into play with a client of his who is a CEO and decided to leave his firm. "He said 'I'm thinking about this. Can you help me with my planning and any exit strategies?' One of my colleagues in New Jersey is quite an expert in that. We didn't have that expertise in house. I would have scrambled and gotten it, but I was able to pick up the phone to a colleague and say, 'What do you think?' The next thing I knew, I had the information."

The new firm also is benefiting from the strength that Modera and Back Bay both realized they had as a result of coming strongly through the Great Recession. "We were seeing around us other practitioners that did not do as well or saying this is a sign I don't want to stay in the business. ... It proved to us that we want to continue doing this well, and we want to continue in a way that allows us to survive as an independent entity for years to come," says Siefert. "There is a fierce desire to be independent on behalf of the ownership group-I couldn't possibly say that strongly enough. And we think that we have created strength and legitimacy through this action and it causes us to really celebrate this."