Last year was a wild ride for the stock market, but in 2023 another turbulent journey may have begun. Many RIAs are feeling this instability and considering it when making decisions – such as selling their business. For RIA owners navigating these choppy waters, it’s essential to stay up-to-date on all applicable impacts of the economic situation.
Doing so can help you make more informed decisions about when and how to sell your practice. So, please read on for an in-depth look at recent volatility within the US and global markets and an overview of what it could mean for your RIA.
This article covers these topics:
As the market fluctuates, investors can get anxious and overwhelmed. Especially when clients are inundated with news of market drops and fear potential losses, they may become fixated on short-term results. That, in turn, can sometimes blind them to long-term goals. That makes it a wealth advisor’s job to help clients stay informed and focused—even when there’s uncertainty in the markets.
When you meet with your clients, it’s important to be upfront about potential risks and gains from their investments. Talk through various scenarios and how each could affect their portfolio, both in the short and the long term. This can help them make more informed decisions about their investments. Additionally, it may make it easier for them to trust you as an adviser who isn’t trying to manipulate or hide information from them.
Your job is to provide wealth advisory services and support clients during times of volatility. Remind them of their long-term goals and why they decided to invest in the first place. Whether saving for retirement, college, tuition for children/grandchildren, or something else, that objective must remain focused.
It can be easy to panic when markets fluctuate. So, encourage patience by reminding clients that investing is a marathon, not a sprint—and that there will always be ups and downs in the market cycle. There may be a few hiccups along the way, but having a plan in place should help ensure their goals remain achievable despite any market changes.
When faced with market volatility, it’s important to remember that communication is key. It’s how we calm client anxiety and help them stay focused on their investment strategies. By keeping honest about potential risks and gains, reassuring them of long-term goals, and encouraging patient discipline during downswings, we can help keep them engaged until smooth sailing resumes again.
Do your homework. Just like any other business decision, you need to do your research when it comes to finding an acquisition partner. Talk to other RIAs who have gone through the process, read industry reports and articles, and attend industry events. This will help you get a better understanding of the different options that are available to you.
Before reaching out to potential partners, you need to know what you’re looking for in a partner:
Answering these questions will help you narrow down your options and find the best match. There are a few different types of acquisition partners out there, so make sure to consider all of your options before making a decision. For example, you could go with a private equity firm, another RIA, or even a strategic buyer from outside the financial industry.
It’s important to evaluate all of the pros and cons before making a decision. Similarly, maintain realistic expectations. Remember that this is a business transaction, so don’t expect things to move too quickly or be too personal. It’s also important to keep in mind that you might not get everything that you want, even from an ideal partner, so be prepared to compromise, if necessary.
After an acquisition, it’s natural for there to be some uncertainty about what new technologies will be implemented. You may also wonder how they will affect day-to-day operations. However, with a bit of planning and communication, it’s possible to leverage new technologies in a way that benefits all parties involved.
The first step is to clearly define what problem the new technology is solving. This will help you communicate the value of the change to all parties involved and ensure that everyone is on the same page from the start. Without a clear understanding of why the change is being made, it will be difficult to get buy-in from employees or other stakeholders.
Once you have defined the problem being solved, you need to communicate the benefits of implementing it to all parties involved. This includes employees, customers, partners, and shareholders. Clearly explaining how the new technology can improve operations and drive growth will help build support for its implementation.
Next, it’s time to train employees on how to use the new tech. This process should be well planned and executed so that they’re comfortable using the new tools and confident in their ability to do so. It’s also important to implement the advance in a way that’s consistent with your company’s culture and values.
This should help ensure that it fits into your existing operations seamlessly. Any changes should be carefully planned and tested before being rolled out company-wide. Finally, once you have implemented the new technology, monitor its performance and then make adjustments as needed.
This includes tracking metrics, such as employee satisfaction, customer satisfaction, operational efficiency, and financial performance. By regularly monitoring these metrics, you can ensure that the new technologies have a positive impact on your business.
Perhaps most importantly, before committing to the sale of your advisory firm, make sure that you take a personal internal inventory. For instance, is money a primary motivation? There’s certainly nothing wrong with seeking a profit, but by itself, money can prove insufficient as the sole reason.
If, for example, you sign with a partner seeking only the largest bid—but they prove to have a completely different, incompatible culture, you could end up regretting it. Pressure, if allowed to, can sometimes spur rash decisions, as well. We all hate stress, but selling simply to lighten your load; with no regard for the other factors above can prove extremely shortsighted in the long run.