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Thought Leadership & Industry Advocacy

Part 9 – M&A: Good or Bad for Advisors?

Suzanne Siracuse Tim Welsh Industry trends Advisor Technology Digital Advice

Tim and Joel discuss the premium price for human services amidst the wave of mergers and acquisitions, and how new players always move into the ensuing market gap.




Suzanne Siracuse, CEO of Suzanne Siracuse Consulting

Oleg Tishkevich, CEO of
Joel Brukenstein, Founder of T3
Gavin Spitzner, President of Wealth Consulting Partners
Tim Welsh, President of Nexus Strategy


Suzanne: I’m going to shift gears and talk a little bit about some things that have been in the news, right, and that’s M&A activity. And, you know, the big one coming up is Schwab acquiring TD Ameritrade. We had a huge acquisition of Advisor Group buying Ladenberg. There are tech companies buying each other, tech companies buying TAMP, the Orion, Brinker merger, there’s just all this activity going on. Do you think this is going to speed up? Slow down? How? And what does this mean for advisors? So, I’d love to get Tim, what are your thoughts around the M&A activity happening? Is this good for advisors?

Tim: Um, you know, I think the jury’s a little bit out on whether its good or not, I think its just an evolution. To Joel’s point, there’s a squeezing the basis points out of everything. So, the providers, the big players, they need to get even bigger. So can that be a good thing for you know, any industry that’s basically built on relationships and boutique experiences? You know, instead of being just, you know, an advisor and part of an ecosystem, now, it’s much bigger, and now there are 10,000 of you, instead of just a couple hundred of you, over the years. That I think is a big change, but depends on the mode it swings, you know. Once you start to consolidate, you know, then all of a sudden you have the Big Bang, and things blow up, and somebody will come off the fringe because of not having as good an experience, we’ll have much more niche players. So, I think it’s inevitable, you know, just the whole technology crushing of basis points in the investment management arena, down to free. I mean, basically, we’ve now coached every client that it’s free, so how can you premium price other than for your human services. So the background ecosystem got to get big, they got to get scale, they got to be able to do this, particularly in a world where interest rates are going to be zero for the next three years, you know, where are you going to squeeze basis points? Commissions are zero, you know, all the levers that the big players had are pretty much gone. So now how can you monetize your platform, your scale, and your business? So, I think it’ll be more creative. So, is that good? I guess you could go argue that, yeah, there’s going to be much more scale in the business. But at the same time, I think that personal touch might get impacted. And I think that’s what advisors are used to. So fantastic topic. You know, we’re living in real time, which is just fascinating. Yeah. Every other day, some other big announcement happens like Wow, I didn’t see that coming. But you think about it. Well, no, that does make sense for what’s really driving this whole industry going. So, I expect more of that to continue.

Suzanne: Yeah, I agree. I think we’re going to see more of it. Joel, what do you think?

Joel: I was going to say the other interesting thing is, you know, I’ve dealt with this for years at the T3 conference. Every time Envestnet humbles up, you know, a tech firm, I’m like “Oh my god, there goes another client for me”. Ultimately, you know, what happens is, when there’s a vacuum, it ends up getting filled. And so, you know, almost immediately, you know, I was a little worried about Schwab TD, but almost immediately, when it looked like that was really going to happen, you saw some players that maybe had been sort of fringe players, as far as RIA Custodian, trying to move into the space. So, there’s at least, you know, two or three new legitimate offerings that are coming to fruition, like Apex really wasn’t in the advisor space. Interactive Broker really wasn’t, Altruist, which is new. So, there’s like three more choices right there for advisors. And whenever you see too much consolidation, as long as there’s inexpensive capital available like there is now, you’re always going to see an entrepreneur who’s looking to start something new. And maybe Oleg, starting another company, you know, in some other form.

Suzanne: You never know. He could be the next Custodian, for all we know. Start some rumours there, Oleg.

Oleg: No no, definitely we’ve got enough on our plate without going into the Custodian space, thank you very much.

Suzanne: We don’t want to start that.

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