Episode 25, Part 1 - Why M&A Stalls Organic Growth in Wealth Management
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Why do mergers and acquisitions stall organic growth in wealth management?
Hello and welcome to the Growth Workshop podcast with your hosts, me, Matt Best and Johnny Adams. We're thrilled today to have three fantastic guests from the world of wealth management. Solve and SBR, we've been working together now for a little over a year and really as a thought leader in this wealth management space, it's fantastic to have you join us today. And just a quick introduction, I guess. So Dave and Donald, co-founders of the business and now executive leaders, of course, of Solve. And then, Gillian, as part of your other responsibilities on other boards advising in this space or on the board of advisors for Solve as well. And Gillian, Donald, co-authors of the Consolidation in Wealth Management report.
So we're thrilled to be unpacking that with you. I wonder if it might be helpful for the audience, Donald, maybe just to give us a bit of insight into how the report was crafted, what your objectives were for the report before we get started.
Yeah. So the background to the report was about a year ago, we did a piece of work which was sponsored by SEI looking at productivity within the wealth sector. And that highlighted a number of pain points, one of which was consolidation. And rather than focus on that in the detail of the productivity report, we decided the topic was so big, let's do another review specifically around consolidation. And that was the genesis of this review, which resulted in the white paper. that was published earlier this summer.
Fantastic. And obviously at Solve, Donald, part of how you help your clients through a combination of services around advisory, M&A, of course, is a big part of the conversation today, transformation change, and then more in the sort of vendor and technology side as well around systems of vendor selection. product and proposition. So you've got a wealth of experience in your team, in wealth management, and in how you help your clients. And obviously, we're going to unpack that a little bit more today. So some of those key notes that we want to hit from the report that particularly stood out for Johnny and I as we were going through it were you know, why M&A kills organic growth potentially. And that's quite a dramatic statement, of course, which we can dive into in a little bit more detail.
But thinking about AUM as being one of the core reasons, AUM growth as under management growth being one of the core reasons why mergers or why merger and acquisition is in this market. We're then going to unpack a little bit about, you know, who's buying in this space, right? So private equity, some of the US advisory firms eyeing up some of that some of the uk sector for expansion um and then some of the changes that have happened in the in that space over recent over recent months and years and then the final topic that we're going to get into today is around technology and technology is at the forefront of everyone's thoughts at the moment with the with ai really kind of taking taking a hold over lots of markets how does that impact wealth management how can that help but also maybe isn't helping at the
across some of this merger and acquisition activity. So that's what we'd love to get into today. And if I could maybe start with that first theme. So, Gilly, I'm going to come to you as we think about some of the consolidation reports findings when it comes to M&A activity and actually how that's significantly constraining organic growth. So in your view, why does organic growth become such a challenge during consolidation? What are the factors at play there?
It's a great question. And actually, this is one thing that came up in pretty much every interview that we did. I don't think there was anybody who contradicted us when we were asking this question. So I think there's three things that really detract from organic growth while you're doing consolidations. The very first and probably the key one is the advisers. So the incoming advisors from your acquisition, they don't know your new proposition. They're focused on what's going to happen with incentives.
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Chapters
4 chapters
1
Why do mergers and acquisitions stall organic growth in wealth management?
0:00–4:52
2
What insights were gained from the Consolidation in Wealth Management report?
4:52–18:14
3
How does advisor engagement impact M&A success?
18:14–24:27
4
What role do clients play in the challenges of organic growth during consolidation?
24:27–26:28
Speakers
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