M&As on the Move: Five Technology Essentials to Successfully Transition New Advisors and Scale to Growth

Viewpoint: M&As on the Move: Five Technology Essentials to Successfully Transition New Advisors and Scale to Growth

After a short hiatus in the second quarter of 2020 due to the pandemic, merger and acquisition (M&A) activity among registered investment advisors (RIAs), family offices and wirehouse breakaways rebounded in June, continuing the upward trend of the last few years. In fact, RIA M&A activity rebounded significantly to levels seen in 2019, according to Fidelity’s second quarter M&A report, while a July report from TD Ameritrade Institutional said M&As set a record in the first half of 2020 with 80 transactions, 7% ahead of the 2019 record of 75 during the same period.

Firms often look to sell their practices as part of their succession planning strategy, while larger acquiring firms seek to add new products, enhance processes or upgrade technology, add to their existing product portfolio, and/or improve operational efficiency. But how can these larger firms – as their business increases in size and complexity – scale to near-overnight growth, consolidate trading, as well as effectively transition and support new advisors?

Technology Must-Haves for Growing Firms

New advisors need dynamic, flexible technology solutions that help them increase productivity and compete on a more advanced level. Here are five game-changing trading, rebalancing and portfolio modeling capabilities firms must have to successfully onboard advisors while enabling the firm to scale to growth quickly and efficiently.


5 Rebalancing Technology Must-Haves


  1. Support for multiple sub-advisory firms to help reduce complexity for the business and for advisors, while giving advisor autonomy on how they manage portfolios
  2. Target generation and tax-aware rebalancing capabilities that bifurcate order generation and order management, and allow advisors to adhere better to client constraints
  3. The flexibility to handle different client scenarios around models, strategies and exception management, as well as one-off scenarios
  4. Features that ensure rebalancing and trading remain in sync with the client’s tax requirements, such as target overrides, location preferences, equivalents and restrictions
  5. A multi-custodial platform with straight-through order execution via the FIX network

Growing Strategically While Creating Value

Merged firms typically have the resources to hire the best people and build the best tech stacks to drive higher operational efficiency and improved client experiences. At the same time, M&A activity can introduce greater complexity into the business, where technology can become an impediment or an integral part of advisor productivity, client retention and business growth. Firms should not underestimate the impact of additional advisory practices and the larger the universe of client constraints and preferences that enter the picture around cash allocations, restriction equivalents and target overrides, for example. Finding the right solution should be on every acquiring firm’s critical path to fulfilling their strategic plan to scale the business and continuously create and deliver value to their clients.