Are more intra-network mergers likely among the 90-plus RIA firms in the Focus Financial Partners network following the combination of The Colony Group and Buckingham Strategic Wealth announced earlier this week?

In an interview, Focus’s new CEO, Michael Nathanson, acknowledged that he and Buckingham CEO Adam Birenbaum were hardly alone when it comes to discussing possible business combinations. Over the years, he, Birenbaum and executives at other Focus RIAs have held long conversations about numerous subjects at company events, ranging from best practices in asset management to tax planning to succession planning and a host of other topics, that sometimes wandered into the idea of possible mergers.

But for existing Focus firms, any advisors who decide to merge their businesses will be among what Nathanson called a  “coalition of the willing.” Focus, he continued, is “not forcing anyone to do anything nor could we.” Apparently, the agreements Focus has with its partner firms preclude that forced outcome.

Nonetheless, when other firms within the network see two of its largest and most successful member firms merge, it sends a strong signal, Nathanson acknowledged. "This was a voluntary decision by two huge firms; they did it because they thought it was best for all the stakeholders," Nathanson said, adding that he fully expects that some firms will follow suit while some will decide that they want to remain as they are.

Nathanson believes the RIA profession is entering an age of interdependence, which was the topic of a Financial Advisor article he authored in January. For a business that was born out of fierce independence, there is likely to be "a tension between independence and interdependence" over the next decade, he argues. Focus happens to be celebrating its 20th anniversary and, since the great financial crisis, it probably has been the most prolific acquirer in the advisory space.

By merging The Colony Group and Buckingham, the two firms will be able to strengthen various services and offer them on a shared basis across the platform. Nathanson noted that many firms within Focus have skills and specializations that could benefit other firms.

One thing that will change going forward is that while Focus will remain an active acquirer, it will only purchase 100% of future acquirees’ equity. In the past, it would purchase a controlling majority interest but leave the founders with a significant stake so that they would have so-called skin in the game.

He believes Focus' plans for shared services, including a "world-class" investment platform, will be a compelling reason why other firms should be thinking about joining forces with Focus.

Nathanson also said that when Focus was a public company between 2018 and 2023, there were tax issues that made certain acquisitions problematic. Though he did not elaborate, he indicated that it would have more flexibility as a private company.