Why Compatibility in a Financial Advisory Transition, Merger or Acquisition, is as Important as in a Marriage.

Before choosing a marriage partner, you are likely to go through a series of vetting rituals: phone calls, dating, the meeting of loved ones, and that’s just the beginning. The average betrothment is usually not legally consummated before more than 6 months and over 700 hours are spent with a future mate before tying the proverbial knot.

Is this same level of thorough evaluation used when financial advisors are determining the compatibility of a potential partnership or sale of their practice? More often than not, the answer is, “no.” Making a decision to move, merge, or sell an advisory practice, may take anywhere from 3-18 months. However, advisors simply do not have an extra 700 hours to spend researching and evaluating the compatibility of all available options.

Wherein Lies the Risk?

The economics in a partnership are often quite clear and in a written contract. On the other hand, values, behaviors and culture, may be written on a plaque, website or brochure, but they are almost never in a contract. Tragically, they, the qualitative variables, are almost always the culprit in a faulty partnership.

As a business owner, your practice is more than likely your most valuable asset and your vocational partnerships have the smallest margins for potential misalignment. According to our research, greater than 78% of Americans who conduct a 40-hour work week, spend more time interacting with their coworkers and partners, than they do their family. From our observations, Financial Advisors are no different.

In a transition or in the formation of a new partnership, the risks posed to your passions, finances, family life, career satisfaction, and personal growth, are too significant and cannot be treated lightly. In contrast, a compatible partnership can not only maximize the monetization of your business, but the positive impact will spread into every aspect of your life and the lives of your team. Although the bond of marriage is quite different from that of a business partnership, the levels of compatibility that are needed and the scale to which the decision will impact your life are very similar.


Our Suggestion

In order to significantly streamline the process and reduce the risk of incompatibility, we would suggest the following two actions:

Engage A Thorough Self-Discovery Process:
This step seems obvious, but very few advisors have ever created an exhaustive list of what they value most as a practitioner and what they want available to them for the betterment of their business. This step is your opportunity to truly discover what you want and what your non-negotiables are. Taking a thorough and methodical inventory of both your fiscal, functional and cultural desires, is dire in the process of ensuring compatibility.

Too often, this step is done on the fly and in a completely informal manner. Often it happens after meetings with potential partners have already begun. To avoid confirmation bias and the possibility of overlooking items of great significance, it is best to take care of this step as early as possible in the process.

Seek Expert Advice and Guidance:
Your clients come to you for your expert advice and guidance. They do so to save time, reduce risk, and maximize financial wellbeing. Seeking input from an expert in financial advisor transitions is no different and can yield an accretive result.

As with you and your clients, trust must be built between the advisor and the consultant who is aiding you in your process. Historically, the industry has been overrun by recruiters with heavy biases and a narrow knowledge of the variety of options available to advisors. Because of this, it is imperative to work with an expert that has your best interests in mind and a thorough understanding of the landscape of available options.

To paraphrase an old African proverb, “You can go faster alone but you will go further with a friend.” In contrast, the aid of an expert in a transition of this magnitude, will allow you to go both FASTER AND FURTHER.

To learning more about how Advisory DNA can help with your self-discovery process, or if you are simply wanting a complimentary consultation with one of our transitions experts, email us at, info@AdvisoryDNA.com.

(Information gathered from New York Post, Entreprenuer.com, Globoforce)