Before M&A, consider ‘process and culture’

Next Tuesday, industry leaders and RIAs will gather under one roof in southern California to explore scalable growth strategies and some of the latest trends in wealth management, including how to better manage a practice.

The RIA Activate California event is sure to draw out RIAs looking to secure their firm’s future, optimize client services, and ultimately enhance the bottom line.

And with former President Trump now elected as the country’s 47th president, Ryan J. Dykmans, chief investment officer at Dunham & Associates Investment Counsel, who will be one of the featured panelists, said advisors should expect a lot of volatility, pointing to a similar outcome from the 2020 election.

“There are some asset classes that I like to keep my eye on, small caps being one of them, because they tend to have a little bit more of a pop in certain sectors,” he said.

He also highlights small caps have the most difficulty borrowing at attractive rates, and as a result, will be most affected, “not just [because of] the monetary policies changing, but any kind of fiscal policy, if we see taxation start to go up,” he added.

Register here for InvestmentNews RIA Activate San Diego 2024.

In terms of equities, Dykmans said to “not get ahead of yourself,” noting that Dunham has been pairing those back in the expectation for higher volatility.

Meanwhile, M&A activity in 2024 has been significant among RIAs. Vincent Gimarelli, institutional sales and consulting director at AssetMark, says those who might be initiating similar activity should carefully consider two things.

“Everyone now wants to acquire businesses or to be in the M&A game,” Gimarelli said. “It all comes down to what you're trying to accomplish as a firm and what types of clients are you looking to grow with.”

From a factor standpoint, he advises advisors to “really look at” how prepared the firm is as an organization to go down the road of mergers and acquisitions.

“To me, it's about culture and process, and before any M&A discussions begin, you really need to think about your process and the culture of the type of firms that you want to bring into your organization and partner with.”

The Great Wealth Transfer is another topic that’s often top of mind for advisors, and as Terry Parham, CFO and co-founder at Innovative Wealth Building highlights, technology and a consumer-based approach to customization is “going to play a big role in who the winners are as we transition from generation to generation with the wealth.”

To ensure a successful transition, Parham suggests advisors conduct a SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis.

A focus on how to support clients over multiple generations, not just the current one, will help consider the long-term, intergenerational nature of wealth transfer, he said.

“Where we shine is we have our newest advisor who is 21 and advisors that are close to 70,” he said. “We have several different age demographics and other types of diversity in our ranks that helps us speak to different ages and life stages.”

Cameo Roberson, managing principal at Atlas Park Consulting, said advisors have a responsibility to operate as efficiently as possible, which “can become a challenge when you have so many different competing priorities going on,” she said.

“The very first driver should be honoring and serving your clients at a very high level and making good on those service promises that you've made,” she said.

Register here for InvestmentNews RIA Activate San Diego 2024.