Growing a Practice Through M&A

Focused on generational diversity

After eight months of record-breaking activity in the registered investment advisor (RIA) market, deal-making cooled off slightly in February 2021, according to the latest data on wealth management merger and acquisitions (M&A) transactions from Fidelity Investments. “There were seven RIA deals totaling a substantial $13.7 billion in assets under management (AUM), including five deals that involved sellers with more than $1.0B AUM,” Fidelity reported.

“There have already been 31 RIA deals representing $61.7 billion in client assets during 2021,” added Fidelity, which tracks monthly M&A activity among RIAs and independent broker-dealers (IBDs). “By comparison, these totals surpass the 20 transactions and $28.8 billion during the same period in 2020, which was considered a rapid pace of transaction activity at the time.” IBD activity picked up in early 2021 after a quiet 2020, Fidelity noted.

wealthbridge124x186One wealth management team that has a key part of its growth strategy rooted in M&A is Florida-based Wealth Bridge Financial Group. Investment services offered through Waddell & Reed, Inc., a separate entity. Patrick B. Gallagher, President is one of the founders of this 3 partner wealth management firm (Patrick Gallagher, MBA/Tom Halvorsen, CFP/Dan Ramsey, CFP). The pandemic’s timing and impact have afforded this practice a two-fold opportunity to both grow the business and to help out other financial advisors.

Working in favor of Wealth Bridge Financial Group is the generational crisis in the industry. The average age of financial advisors is about 55, and approximately one-fifth of advisors are 65 or older, according to a 2019 J.D. Power report. As these advisors move into retirement – and with more of them considering to do so as a result of the pandemic – leading firms will be those that effectively attract, develop and retain new advisor talent, according to the consumer satisfaction and market data company.

“We’re seeing a shortage of advisors in the industry,” Gallagher told Advisors Magazine in a recent interview, “And we’ve used this time to reach out to other financial advisors in the area and have some offers out there to acquire other practices.”

The 35-year-old Gallagher explained some of these older advisors have been working quite a while building successful practices, but are perhaps reluctant to change with the times, and often struggle with technology. Many have done a very good job planning their clients retirement but have neglected to plan their own and do not have a succession plan in place.

“We’ve seen this time as an opportunity to grow our business, acquire other financial practices and to get in now and help those individuals get up to speed with technology,” he said. “We can acquire their practice, retain them if they choose, and help them by introducing them to a newer way of doing business.”

Leveraging Technology
Indeed, leveraging today’s technology — from social media to Zoom calls — is critical to surviving in the financial advisory arena. The J.D. Power survey indicated that “high-functioning tech drives advisor loyalty and advocacy.”

Gallagher’s firm now advises approximately 1,700 households with about $550 Million under management. The average client age is about 65, so the practice also uses its technological proficiency to advance clients’ own use of technology.

“Florida didn’t have the restrictions as in other states and we remained open, but many of our clients were considered vulnerable to COVID-19,” Gallagher said. “During this time when we weren’t seeing as many people in person, we really hit the phones and tried to talk to as many of our clients as often as possible.”

There was a lot of proactive outreach, teaching clients how to use Zoom and other video-conferencing tools, for example.

“Many of our clients who were not technologically savvy are now,” Gallagher said. “They were appreciative beyond just financial matters, because they suddenly had a means to see their family or their grandchildren.”

Interestingly, Gallagher’s own friends and family tried to talk him out of becoming a financial advisor.

Always entrepreneurial, he was attending college in the early 2000s and running several businesses during the day — including car detailing, pressure cleaning, roll-off dumpsters and landscaping — and taking classes at night. The economy was doing well in 2004-2007, and Gallagher was not really sure what he’d do after graduation, but he had decided while doing his master’s degree that his concentration would be in finance.

After graduating college, he sold his businesses and all the equipment. He interviewed at several different financial firms — from major players like Edward Jones, Merrill Lynch and Morgan Stanley — to a smaller broker dealer that he liked the best at the time, because it offered greater independence.

“You were able to work your own hours, build your own book of business and that just kind of intrigued me because I didn’t fit into the typical employee mold,” Gallagher recalled. “Also, this was in 2008. I remember my friends saying, ‘You’re going to be a financial advisor? Why would you do that? The market’s going to zero, there’s no money left to manage.’” But he was determined to give it a shot.

“What looked like the worst time to get into the business turned out to be the best time to get into the business,” Gallagher said. “Getting there at the bottom, everybody was open to talking to people, so I was able to get clients and grow relatively quickly, starting out at a young age of 22.”

A Generational Advantage
Today, Gallagher holds that MBA as well as his Series 7 and 66, and the 2-15 insurance license. Wealth Bridge Financial Group is a practice that requires no minimum investment. Its staff numbers some 8 people, and generational diversity is not only evident, but by design.

“We have advisors on our team that are Baby Boomers, Gen Xers, Millennials and everything in between,” Gallagher said. “I think we are different than most because we are a multi-generational independent financial planning team.”

wealthbridge652x368As such, the firm’s team understands that every generation comes of age during different economic circumstances, and this can have a major impact on their ensuing financial habits.

Despite the proliferation of mobile trading, robo-advisors and online investing platforms, Wealth Bridge Financial Group doesn’t see such do-it-yourself tools as a threat – no matter the generation.

“The majority of our clients are Baby Boomers and Traditionalists,” Gallagher said. “They really enjoy the face-to-face and having that person to talk through situations, and they are less apt to gravitate toward mobile platforms and do-it-yourself online tools.”

Curiously, according to a July 2020 LPL Financial report, while a financial professional will often recommend that Boomers move retirement funds out of risky assets like stocks and into bonds or money market funds, all Boomers haven’t listened. “In fact, a full eight percent of Boomers are entirely invested in stocks, while nearly half of all Boomers have a riskier allocation than analysts recommend.”

Gen Xers, according to the same LPL report, are also more likely than Millennials to seek out the help of a financial professional. “But because they’re in their prime-earning years, with some of the older Gen X cohorts nearing early retirement, they expect quick, accurate answers from those who are managing their money.”
Gallagher would concur with that LPL finding.

“The senior Generation Xers — you know the latch-key kids — are much more independent,” he said. “They were the first generation to come home and mom wasn’t in the kitchen making them a snack; mom was out working and they had to make their own snack.”

As a result, Gallagher recognizes that Gen Xers may be more apt to use online tools and do things themselves.

“But the other side of that is, as they start accumulating more and more money, they now see they need more advice,” he said. “And that advice is usually driven by a human being and not an online tool. Because there is so much information out there today, it is easy to get confused and they want validation — someone else’s perspective.”

Fact is, Gallagher says the firm has more Millennial clients than Gen Xers, and he’s noticed the same tendencies with the youngest, highly tech-savvy generation.

“Millennials are much more apt to talking to a financial professional and getting opinions,” he said. “Yes, they still want to do it themselves, so they’ll usually have some play money on the side for online apps, but for their larger accounts they feel safer working with a financial professional.”

Whatever the generation, it still comes down to an individual’s own investment philosophy and money mindset.

“It’s all fine when markets are strong,” Gallagher noted. “But when there’s a 34 percent decline like last March, it’s all about emotional support. And that’s a big part of our job — our value add is in helping people not make poor financial decisions, especially in the time of market turbulence.”

When markets are good, Gallagher said that talking to clients and educating them is standard operating practice. “But when things are bad, we really talk to our clients even more so,” he emphasized.

Overall, Gallagher describes Wealth Bridge Financial Group as a team of holistic financial planners, wealth advisors, and investment managers. He’s quick to say, “We’re not stock brokers. We’re not get rich quick. We’re not going to double your money in three months,” Gallagher said. “We’re really looking for people who have goals that are achievable and are realistic about getting there.”

At the top of the agenda with prospective clients is to have a conversation about mutual expectations. Gallagher wants to know the expectations a client has for his firm, and he needs to share his expectations of the client.

“We want to make sure we’re aligned,” he said. “We don’t want to sit here and have hours and hours of meetings if we do not have the same expectations of each other. This is a long-term relationship that we form with our clients and they not only become our friends but also become a part of our family over the generations.”

At the outset, Gallagher also urges prospects to attend any of the firm’s upcoming events in order to interact with existing clients.

“We’ll be starting these again shortly and we always invite all prospects, so they can mingle with our clients and ask them any questions they want,” Gallagher summarized.

For more information on Wealth Bridge Financial Group, visit: or call 727-844-3232


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