Kay Lynn Mayhue, President of Merit Financial Advisors, joined Julie Cooling, Managing Director of RIA Channel, to discuss growing a financial advisory firm through mergers and organic growth.
Merit has acquired 21 firms in just over two years, reaching over $12 billion AUM. There are many trends that make it attractive for advisors to join a larger firm. The demands on financial advisors continue to grow and the technology available to run advisory businesses is becoming increasingly complex. This complexity may be driving the merger activity in the advisory business, as advisors seek larger partners to manage technology and operations, which frees advisors to spend more time with clients.
Advisors also seek succession plans, as one-third of advisors plan to retire over the next decade. Many next-gen advisors are great financial planners but may hesitate to take the entrepreneurial step to launch and manage an advisory firm.
While mergers drive asset and revenue growth, it is also essential to continue to grow organically. Merit has organic growth tracks that advisors can plug into. These include revenue share arrangements with professionals such as accountants and insurance agents and niche markets such as widows or couples currently divorcing. Firms offering advisors the best opportunities and resources may be seen as the strongest merger partners.
Mayhue is intentional about having a diverse advisor team. To attract diverse and younger advisors, it is crucial to cultivate knowledge of the financial advisory business among high school and college students.
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