“To us, size doesn’t matter. We have done deals as small as $55 million in AUM and deals upwards of $2.2 billion. We are strong proponents of a fee-only, fiduciary financial planning, client-centric philosophy, so any potential partners must truly believe in that,” he said.
“In pretty much all of our deals, the selling principal stays involved. This is not
an exit strategy for that person. Rather, it is a career development opportunity not only for the seller, but also for his or her employees,” Barton said.
For Parallel Advisors in San Francisco, the success of two earlier acquisitions, which added $200 million in AUM to the $1.9 billion firm, has convinced the owners to launch an inorganic growth strategy, according to C.J. Rendic, CEO.
Going forward, there will be a further consolidation in the industry, Rendic said. “Our pitch to advisors is that we can sustain a high level of relationship management, while allowing advisors the autonomy and flexibility to manage their clients their way with our support.”
Consolidations are good for the industry and for the clients, Sonnen added.
“The industry is moving from practices to businesses. The more billion-dollar shops that exist, the more it shows that the RIA model, rather than a wirehouse model, is a good business model,” he said.
“For the clients, you need succession planning and having multiple advisors in the firm solves that problem,” Sonnen said. PFI's report is available here.