The past 18 months have shown us a burst of consolidation in the wealth management space in North America, and we expect even more this year as firms face increasing pressure to scale. And while many firms have clearly defined the key strategic outcomes they want to achieve with their M&A activity, I believe that actually accomplishing them depends on carefully managed decisions. Deal differences aside, from different projects my teams and I have been working on in the space, we saw a few common themes where firms typically struggle. So, I wanted to share some thoughts on how to help drive value during integration.
1. A common M&A pitfall is downstream decision-making that doesn’t align with strategic goals.
Many wealth management leaders develop a list of desired outcomes and share a glimpse of it to the street. But achieving those outcomes depends on many smaller decisions made throughout the integration process—decisions made by a large number of people across different teams. Without a clear understanding of these outcomes, the teams executing the integration often make smaller decisions that stray from the strategic direction. From prioritizing fringe cases to adding scope that delays timelines, it’s the micro-decisions, made in the moment, that could make all the difference. And generally, there are many people making those decisions across multiple areas of your company—which is a reality, but also a set-up for inconsistency.
To help ensure those decisions and the resulting actions stay true to desired outcomes, I recommend spending time at the outset of a deal to lay out guiding principles. This may sound very theoretical, but I assure you, it’s very real-world. When your teams have a concrete set of guiding principles, those can serve as a framework that every decision is weighed against. Not only does this empower your teams, it allows them to make faster decisions that are aligned with and support the right outcomes.
For example, we worked with a firm that created guiding principles at the start of their integration and was able to rapidly shut down build requests that strayed from their strategic goals and focus their tech teams on the most critical work.
2. A centralized team needs to stitch together the transitional client experience and drive organizational readiness.
It’s critical to look at client experience holistically during an integration in the wealth space. But client experience has two separate lenses to consider—desired target state experience AND the transitional experience.
Transitional experience can be tricky because many firms may downplay the communication and organizational preparation needed to master it. Most invest heavily in their technology buildout but don’t think as carefully—or invest as wisely—in how to equip their sales, service and operational teams to be ready to support the transition.
It’s not uncommon to have 15-20 different integration tracks and lines of business defining components of the transitional experience. You need a centralized team to stitch together those components of the transition approach and what that experience looks like, capturing impacts to each group and identifying the best way to drive client and organizational readiness. Experience impacts could be that your high-net-worth clients need white-glove validation of their account setup and assets throughout the transition because of the service they are used to receiving or the risk of flight during integration. Maybe you need extra digital communications on your website or via personalized emails for the bulk of your clientele to prevent concerns before they call your contact center.
One firm developed a SWAT team that focused on its VIP clients, validating all aspects of their data throughout the transition to confirm they were ready for business. This team also checked in with those advisors to ensure they felt they had what they needed to provide impeccable service and explain anything that changed due to the conversion. Another firm leveraged voice of the customer analytics to help track sentiment and feedback in real-time, which made them ultra-responsive to client concerns during the transition.
Don’t neglect the advisor and service experience. Wealth firms that properly equip advisors and service teams to handle client changes and bumps in the road fare better. Most integrations have at least 40-50 different items advisors need to know or be prepared to handle. You can’t leave those to chance.
3. Don’t buy into the myth about value creation beginning post integration. It begins during the integration.
I talk to so many executives who believe they can’t get to real value until after the multi-year integration journey. It’s not true. You can begin segmenting and cross-selling acquired clients, using analytics to identify the best opportunities, during integration. And doing so can help reduce flight by clients who are likely being wooed by your competitors.
With complex integrations that may take two to three years to complete, wealth managers have to unlock the power of their data to enable them to get to value sooner. By choosing use cases that don’t depend on your platform being fully integrated, you can prioritize where to focus in parallel to the integration efforts. For example, if one firm offers services that the other didn’t—say, mortgages—explore which acquired clients are facing life events that should be targeted for those offerings. You have the data.
I hope these lessons have given you something to consider for those about to embark on, or in the middle of an integration. Spending time on these areas up front could help your teams delight clients—and get to value—faster. I would be happy to get your feedback on my thoughts and please reach out if you have any questions.
Special thanks to Rachel Flanagan, Accenture Manager – Capital Markets, Wealth Management for contributing to this blog.