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Merging RIAs, merging technology

Create a process to evaluate the systems each firm uses for use in the decision of which to keep and which to sunset

Feb 28, 2014 @ 9:02 am

By Gregory H. Friedman

Financial advisers considering a merger or acquisition are usually focused on securing long-term growth or a succession plan (or both), and the benefits of an RIA-to-RIA transaction (scalability, access to new markets, skills, and specializations) certainly are behind the growing number of firms considering M&As.

While on the surface it may seem like an easy decision for advisers to make to move their firm to the next level, it's important to understand and appreciate the complex operational, cultural and philosophical changes that will need to take place to keep your business running smoothly. One of the most overlooked factors in this process is the merging of technology between firms.

How do you decide what systems to adopt firmwide and which ones to sunset? When do you invest in new technology? Most importantly, how do you ensure the least disruption in day-to-day business during this transition? Here are three steps my firm took during a merger with an RIA firm.

1. Create a process

Start by creating a list of all technology used in each firm. Create a process to evaluate each of these systems by approaching different groups (advisers, client service members, etc.) for their input. For instance, if the firms are using two different financial planning applications, have different groups assess which application they feel may serve the new firm. Would a new application best serve the firm? Gather this information for management to help them make an informed decision that everyone can support.

2. Assign ownership

Once you've decided on your technology, assign an owner to each of the key systems. This owner will serve as the point person for questions, manage training and hold regular meetings on progress and adoption.

3. Require tech training

Training on new technology is a must, but keep in mind that no two people learn the same way. Create a common standard and provide training to employees based on their roles and engagement in different systems.

During a merger or acquisition, it's not just your employees who need to adjust and adapt; your technology must also work differently to fit the needs of your new firm. In my case, we were incredibly lucky that our most central system — our CRM (Junxure) — was one used by both firms (which aligned with our philosophy of a client-service-centric model). You'll find that if you've chosen a firm for a merger that shares your beliefs and outlook for the future, merging technology will be less of an imposition and more a meeting of the minds.

Gregory H. Friedman is co-founder and president of Junxure and founder and president of Private Ocean, a Bay Area wealth management firm.

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