A new product combining technology with M&A consulting services for RIAs was recently launched by AmplifyRIA and RIA Match, off the back of advisor demand for an end-to-end solution that would oversee the entire relationship-matching process.

RIA Match Concierge Consulting is aimed at RIAs that are looking to buy, sell, merge or add advisors, led by the chief executive and founder of RIA Match, Mary Ann Buchanan, and Kathleen Asack, founder and principal of AmplifyRIA.

Family Wealth Report recently spoke to Buchanan and Asack about the rationale behind the launch of RMCC and how it ties in with what they described as the “robofication” of industry M&A.

RIA Match was launched in September 2012 as a self-serve platform through which advisors search for free and pay to connect. The firm collects from its users 72 data points and from this joins the dots between individual advisors' strategic endeavors to align “best fits.” But many busy RIA Match subscribers started asking for a more comprehensive solution on top of the self-serve platform – to essentially take over the entire process.

Asack and Buchanan met around two years ago while talking about their own areas of expertise, with Asack noting that consulting is “difficult to scale.” And thus the idea of RIA Match Concierge Consulting was conceived.

“I don’t think you can scale every single part of the process, but there are elements of it that you can,” Asack told this publication. “That was the start of the build-out of RMCC; for those advisors that don't have the time or confidence to facilitate this incredibly important professional endeavor, they can now come to us through RIA Match and have an expert advisor hold their hand through every step of the process.”

“Robofication” of M&A

Through RMCC, RIA Match's advisor matching platform uses algorithms to align indicators and motivators of interested parties, while AmplifyRIA counsels RIAs during the process.

“We believe the best opportunity for advisors comes from combining the best of expert consulting and sophisticated technology-driven matching,” said Buchanan. “We call it the 'robofication' of M&A.”

Taking charge of the actual profiling side of things is certainly a key aspect of RMCC, but what Buchanan and Asack believe is in many ways the biggest value-add feature is its assistance with helping advisors “crystallize” their vision.

“If you don't know where you're going, you're never going to get there,” Buchanan said. “Do they want to sell and go, sell and stay...what does that look like? You have to have a plan for how you want to execute it. There is complexity to the entire process.”

Indeed, Asack said it is often the case that an advisor's outcome will differ starkly from their intention – particularly those that had an initial view to buy.

“Oftentimes, as you begin the profiling and discovery process, what you begin to learn is that they are trying to solve for something else,” she said. “For example, they'll tell you that they want to grow, which is why they say 'I'm a buyer.' Yet, when you peel the layers back, what you learn is that they actually have a retention issue. This is a hypothetical example, but relevant nonetheless.”

Asack added: “If assets and clients are leaving a firm, I might suggest that it refines its value proposition or perhaps client service experience. It's related, but it doesn't mean that you should be buying. Rather, what we would encourage them to do is to look inwards and solve the root problem before reaching outwards.”

AmplifyRIA and RIA Match believe that, while certainly relevant, focusing too much on revenue multiple or deal prices may cause a “misguided emphasis” on those metrics.

“Philosophy and culture are just as important to the success of the deal,” Buchanan said. “We believe in an approach that gives equal consideration to qualitative and quantitative attributes.”

She added: “We find that advisors are often looking at numbers that may be out of reach, or misaligned...which is why we encourage them to look inwards at the various metrics that actually drive that.”

In another interesting observation, RMCC is also being used by advisors to “dip their toe in the water, look around,” and gain knowledge on how to go about what it is they are planning to do - or what they might like to do in the future. 

“We see people testing the water as well as procrastination,” said Buchanan. “But we believe that RMCC will give them a path and a process that will help them move on to the next stage.”

Indeed, education, market intelligence and “setting realistic expectations” are among the value-adds RMCC can deliver to clients, Buchanan said.

Wider M&A trends

According to Asack, there are a few primary drivers of M&A today in the RIA sector.

“First and foremost is the aging population of RIA business owners, or financial advisors in general,” she said. “So the average age today is mid-50s and many - upwards of 70 per cent - have reported not having a succession plan in place – or at least one that's not viable. That creates great risk potential for not only the advisor but clients.”

Another big factor, she continued, simply relates to how fierce the competitive landscape has become.

“It's extremely difficult...vying for the next client to differentiate yourself, to convey a unique value proposition – particularly now when you are competing against Wall Street firms and independent RIAs alike.”