As the RIA industry matures, consolidates, grows, and evolves, many of our clients contemplate M&A transactions, changing their technologies or workflows, or they may strive to break away from their current employer to build their own RIA. We focus our attention on building and improving the operations and efficiencies of these firms, and often write practice management pieces to share our learnings and best practices. However, we have yet to plunge into the emotions that are often involved in each of the above projects, and what recurring fears we find, regardless of the engagement at hand. Our aim is to explain the impetus to the following fears, and how to prevent/calm these uncertainties:

1. Fear of change in human capital
2. Fear of giving up legacy processes
3. Fear of the unknown


In the financial services industry, people often think of an M&A event as a transaction in which a buyer offers some economically enticing incentive to a seller in return for the seller becoming part of the buyer’s firm.  Sometimes, M&A is viewed from an operational lens, in which it’s realized that there is more to an M&A deal than cash and equity; there are technology systems, branding consolidation, and office space requirements to take into consideration.  Firms that acknowledge the intense integration aspect of an M&A deal are those we tend to work with, as they value our ability to guide them through the operational and emotional roller coaster that both firms are going through as a result of this merger.

In our experience working through projects and with various personnel on both the Buyer’s and Seller’s sides, the emotions of each party are rarely considered, though they should be amongst the most important aspects of the transaction.

When Buyers and Sellers are still at the negotiating table, they usually work through investment philosophy, geography, and valuation.  Eventually, they will work through operations and processes (that’s where we come in!), but how do you deal with the emotional and psychological factors involved – especially for the employees of the Seller?  With this in mind, we will review each of the three aforementioned fears and aim to provide ways that both the Buyer and the Seller can abate these worries.


  1. The fear of change in human capital

Imagine this: employees working for an advisor/RIA just learned that their company is being sold to another RIA.  The employees have no idea who the Buyer is, what they stand for, what their culture is like… should employees be worried about their job security?  What does this mean for their career?  Should they start looking for new opportunities elsewhere before this new boss gives them a pink slip?

To prevent the above insecurities and unnecessary anxiety, it’s best for the owners of the Buyer and Seller to deeply vet how their respective firm cultures will complement each other’s and how to clearly communicate to the Seller’s employees how this will benefit everyone moving forward.  A great exercise to go through is for the Buyer to prepare their healthcare, benefits, and incentives to share with the Seller’s employees.  If possible, it’s even better to compare these new benefits to the ones that employees have had access to working for the Seller.  Additionally, if the Buyer is able to prepare how the Seller’s employees will fit into their org chart, what responsibilities are expected of them, and how they will work within this new framework, it eases the employees’ minds as it displays this process has been vetted and their personal contributions to the new firm have been taken into serious consideration.

In the unfortunate case where there are human capital collateral damages, the executives of both the Buyer and the Seller need to be upfront and transparent with those individuals.  They should offer the employees a transition period to stay on and help throughout the onboarding and ensure that their responsibilities will be properly looked after.


  1. The fear of giving up legacy processes

From an employee’s perspective, they have put time, effort, and energy – often over the course of years, sometimes decades – into how the Seller currently runs its business and services their clients.  They likely have forgotten whycertain systems or processes are in place, but know that this is the way it’s always been done.  How does a Buyer communicate that changes in the way they operate might be a good thing?

Buyers should alleviate these fears by sharing how much more efficient the Buyer’s and Seller’s employees will be using new technology, and how their new processes will eliminate tedious, manual work, like entering the same data into multiple systems, sending coworkers task-related emails rather than assigning tasks in a CRM, or pulling different pieces of a client’s quarterly report from multiple systems.  This will display that the employees’ time is valued!  It’s also a good idea to have the various new vendors available to demo their systems, if warranted, and to have a detailed training agenda set in place to show the employees how to use these various new systems, what the new processes will be, and that there are resources set aside to help them be successful.

  1. The fear of the unknown

Employees’ (and owners’!) fear of the unknown may be the most relatable emotional response.  Will their salaries remain the same?  Will their commutes change?  Will they still manage the same clients, or will they be reassigned to new client service teams?  These are all very real concerns, and can be quickly appeased, if not prevented entirely.  Buyers must present an employee onboarding plan to show that all these concerns and unknowns have been discussed and addressed as part of the negotiations in merging the two firms.

This onboarding plan should include where to access important employee documents, like the operations manual, benefits overview, or standardized processes in place.  It should incorporate a well thought out training schedule, as mentioned above, and literature explaining who the Buyer is, what the mission statement is, and how the experience and tenure of the employees are valued.  It should explain how they service clients and center their needs at the core of their business.

Preparing clear communications and setting expectations from the onset is key in quelling the above fears and high-stress emotions of all employees who have been surprised by the announcement of an M&A deal.  Buyers need to impress upon the Seller’s employees – their future employees – that this consolidation of firms is going to benefit both the employees and their clients, and that their well-being has been thought about and planned for.


As RIAs assess their technology and back office infrastructure, they often find that some aspect of their systems and/or processes need updating.  For firms that have been around for over a decade, their technology is often outdated and no longer scalable for the business they’re trying to grow.  They may look to upgrade to tools that help automate certain tasks, such as performance reporting providers that automatically run billing files or create scheduled quarterly client reports rather than requiring an employee to manually prompt the system to create one. Sometimes firms recreate some of their manual, paper-driven processes electronically, usually within their CRM and developed through various workflows.

When we work with firms looking to make such changes, typically the RIA executives have a vision and a pretty good idea of the system/process they’d like to implement before even hiring us.  When we meet with the team in person, we have the executives explain their vision and then step out of the room so that we are left with the employees of the firm that will be responsible for implementing such changes.  It’s at that point that their frustrations and fears arise as we begin to map out exactly how the new technology will need to be designed.

  1. The fear of change in human capital

As we brainstorm with employees how the new technology will be built out, we often find they are initially quite hesitant in being transparent with us.  They fear that with new and improved technology, the role they once had will cease to exist.  I once sat with a team of five individuals that focused solely on reconciling data pulled from their performance reporting provider.  Their system was outdated, and their job was entirely based in Excel, scrubbing and cleaning data for reports.  With the replacement of that system, all reconciliation would be done within the new system automatically.  A report that would take 8 hours to download from the legacy system would now takes 8 minutes in the new one.  After realizing this, it became pretty clear why they might not be keen in talking to me when it means potentially eliminating their current job function.

We quickly had to pivot our approach and explain that while their responsibilities and titles might be changing, their position with the RIA would remain.  We saw relief pass through them as they relaxed and began talking through how to set up householding new accounts, how to organize fee schedules, etc.  It’s a wonder what a little reassurance does, and how important it is to openly communicate with staff throughout any change in technology to make them feel part of the process and validate their value to the firm.

  1. The fear of giving up legacy processes

Employees have often spent much of their tenure developing processes surrounding their day-to-day activities and routinely work through specific functions based on how they’ve always done things.  When we begin to analyze how a new technology system will affect current and future processes, we again feel resistance against change.  After all, if things have worked well enough, why change the status quo?

Assuming employees have been reassured at this point that their role within the firm is secure, the difficult work of rewiring how people think about their day-to-day begins.  It should be emphasized that the employees have the opportunity to take ownership of the new system(s) and processes and should actively think about how to better their experience in delivering exceptional service to clients.  They should also be reminded that time saved in eliminating manual tasks can be reallocated toward spending more face time with clients, servicing more clients, or delivering new services to clients.

  1. The fear of the unknown

As we discussed in Part 1, employees’ fear of the unknown may be the most familiar emotional response.  How much time will this new system take to plan and implement?  What about the recreation of processes that work just the way they are?  What if the new system ends up being more cumbersome than the legacy system?  While valid, many of these concerns can be addressed just as quickly as they arise.  The executives of the RIA should work closely with the new system’s vendor to develop an implementation plan and timeline that clearly sets expectations for the rollout of the new system and eventual replacement of the legacy tool.

This implementation plan and timeline should include the phases of development of the new system, who from the RIA and vendor will need to be involved, what steps will need to be taken by whom to remain on target, and how each party defines success.  This will enable employees to have a say in what the end goal is and create a deeper sense of ownership in the ultimate outcome.

By reassuring job security, emphasizing that time saved will allow for better client service, and sharing an implementation plan, employees’ fear of change that ignites when introducing new technology should be alleviated.  RIA executives need to work closely with their new vendors and own employees to align the end goal and keep in mind that more efficient processes, while designed with the end client in mind, ultimately are created to reduce duplicative efforts and enhance the daily work of employees.


As captive advisors within the wirehouse channel begin to consider Independence, they seek information on the various models available to them and the strategies they should implement to transition client assets and set up their new RIA.  They’ll often speak with recruiters, industry consultants, custodians, various system vendors, and potential platform solution providers.  With each phone call they learn more perspectives and options on how to best escape their current firm and successfully transition their clients to the independent segment of the industry.  By the time we speak with the advisors whom end up as clients, they are generally very well-informed in the basic steps needed to become an RIA.

However, when we begin building out their new RIA and things begin to take shape, the fear sets in.  These advisors are often coming from an environment where most everything besides business development is handled for them.  Their office space, technology, HR, and compliance are all taken care of by the larger institution.  When these advisors realize that all of this is now their responsibility, the uncertainties loom.  Especially as their anticipated resignation/launch date nears, the anxiety they feel is palpable.  While our clients seeking independence come to us from all over the country, we find their fears and uncertainties are often universal.

  1. The fear of change in human capital

Unlike Part 1, where we discussed the fears the employees experience during an M&A transaction, or Part 2 where we delved into employees and advisors alike anticipating the repercussions of introducing new technology, the fears and responsibilities of breaking away are entirely on the shoulders of the advisors and are exacerbated by the fact that they have never been responsible for running a business before.

In order to effectively manage a business, breakaway advisors will need a hardworking and enthusiastic team to support their efforts and service their clients.  As most breakaway advisors work while still employed at a traditional wirehouse, they cannot share their intentions with any of their team at their current firm.  As these advisors develop their systems, think through processes, and figure out how to offer payroll, healthcare, and employee benefits, they begin to second-guess themselves.  Will their team join as employees of their future venture?  If they need to hire new employees, how and where will they find the right employees?

Luckily, there are many available resources to help advisors think through how best to build out future employee benefits and can prepare for all potential outcomes following the advisor’s resignation.  There are Professional Employer Organizations, or PEOs, that handle a company’s HR, payroll, benefits, and workers’ comp on an outsourced basis.  There are also brilliant employment sourcing firms that help find talent that fits both the described role as well as the cultural needs of the RIA.  Advisors should most importantly understand that the allure of the independent space is not only beneficial in their ability to truly own their business and serve their clients, but it is also beneficial for their employees who generally are better looked after at a smaller firm.

  1. The fear of giving up legacy processes

While exciting, the prospect of breaking away can also be terrifying once advisors realize the life and way of doing business that they have created for themselves will be forever changed once they resign and form their own RIA.  After all, they have built a stable, successful practice and likely live a comfortable life.  They understand that when they walk into their current office, their computer works, their printer has toner, and their clients trust them.  Will this new venture prove to be a success, and better than what they currently have?  Or a flop, and nightmare to manage and survive?

To alleviate these anxieties, they should remember that if their clients are loyal to the advisor relationship, all the rest will fall into place.  With the right guidance, they will have the appropriate systems integrated, will have greater freedom in what technology systems will make up their infrastructure, and will therefore have greater freedom in developing processes that better fit their business’ and clients’ needs.  With this newfound freedom, they will be able to grow and scale their business to meet the needs of a growing and ever-evolving sophisticated client base.

  1. The fear of the unknown

The humblest admission we’ll hear an advisor say as they’re contemplating the various pieces of their new business prior to breaking away is, “I don’t know what I don’t know.”  There are SO many pieces required and decisions to be made when building out a business that advisors often feel as if they’re drowning with the overwhelming amount of details to consider.

The best way to combat this fear is by leveraging available resources that will help assist and manage this process.  These partnered allies will be able to educate and guide advisors through this progression and – just like the advisors that have the clients’ best interest in mind – will lead advisors with their business’ best interest in mind.  Though the development of their new RIA might not always be a smooth process, advisors should take comfort in knowing that other advisors before them have built businesses from the ground up, and more advisors after them will continue to do the same.  On the other side of these breakaway fears and anxieties is an independent team of advisors and employees who inevitably will say, “Why on Earth didn’t we do this sooner?”

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