We’ve headed into a busy fall filled with industry events and if you’re on the wealth management industry circuit, we’ll probably see you out and about! Recently, Doug Fritz attended Echelon Partners Deals and Dealmakers Summit. As is our practice after we return from an event, Doug shares an unbiased look at his big takeaways in two minutes or less:
M&A is Still Incredibly Strong
The merger and acquisition (M&A) market remains hot. Money is flowing into the industry. Aggregators continue to aggregate. New entrants are coming to the market. We can clearly see the appetite for these businesses to grow and the high expectations for accelerated M&A.
Right now, we have growing firms built in a modern era from a technology and client experience standpoint, that have a strong chance of disrupting the industry successfully. These aren't 100-year-old brands trying to innovate from a culture of stagnation. These new companies, with new blood and new energy, are changing the advisor and client experience in new and novel ways.
That innovation and the ability to fund great experiences that lead to growth is exciting. In the past, we’ve seen many wealth firms hold back on cash for technology spend and wait for things to happen. This is not the case for these firms. It’s a new era of wealth technology that will drive expectations and set the benchmark for what great experience looks like in the next decade.
Many Firms are Speeding Toward a New Regulatory Environment
The one thing that no one talked about is that as these firms balloon in size and cross into multiple hundreds of billions in assets, they're rapidly headed towards a more intense regulatory environment that they likely haven’t prepared to enter. My experience from my years at Wells Fargo, Wachovia, and First Republic, tells me they’ll become subject to a very different level of scrutiny.
Large firms receive an outsized percentage of attention from the SEC, FINRA and other regulatory entities. These growing firms should expect a much higher enterprise standard for data access, roles and responsibilities, documentation of process, and certification of application of numerous laws that have historically applied to the very large firms. These small but growing firms would be wise to really start thinking about what it will take to be regulatory compliant. Growth doesn't come without some potential headaches.
Two minutes wasn’t enough? Get in touch with Doug to hear more about the industry.
