LAS VEGAS— Joe Duran has a few words of advice for aspirational advisors looking to grow their firm past the $1 billion threshold: ask yourself why.
‘Why do you want to get bigger? And if the reason you want to get big is you want to make more money or you just feel like it, there’s a high likelihood you will not succeed,’ the founder of $23 billion RIA United Capital said during a panel discussion with some of the industry’s top executives at the MarketCounsel Summit.
‘Motivation really matters and attention really matters… it’s very hard for most entrepreneurs to realize if their business isn’t serving the business, then everybody’s serving a master.’
For some advisors, making that leap entails surrendering control, said HighTower Advisors chief executive Elliot Weissbluth, who can speak from personal experience.
Weissbluth is in the process of exiting his role as chief executive and becoming chairman of the $55 billion Thomas H. Lee-backed roll-up.
‘If you want to grow and succeed, you have to constantly be letting go of the dogmas of the past and embrace change for the future,’ Weissbluth said. ‘Just because you’ve been doing it one way, doing it your way –remember, I started HighTower on a piece of paper in 2007, I’ve been continually giving up control, giving up responsibility and becoming less and less important to that business as we’ve tried to succeed over the years.’
Aggregators or roll-ups like Weissbluth’s are taking on a ubiquitous role in the RIA mergers and acquisitions landscape. A Fidelity study from earlier in the year found that strategic aggregators like HighTower and Focus Financial Partners accounted for more than two-thirds of dealmaking in the first quarter 2018 after accounting for just 47% of acquisitions in the first quarter of 2017.
The push for advisors to scale up is not new, but the conversation can go a lot deeper than merely ‘grow or die,’ explained Todd Thomson, the chairman of RIA platform Dynasty Financial Partners.
‘For those advisors who really want to accomplish that and they want to professionalize their business, we think it’s really exciting. We think with the right people around you, with an understanding of what you need to offload, what you need to outsource, the sacrifices you need to make… the fact the journey will be difficult is really exciting,’ he said. ‘Big doesn’t mean better. You’ve got to get big and better.’