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22 July 2021

Organic vs. Inorganic Growth – Can You Have the Best of Both?

As the wealth management industry continues to set record volumes of M&A deals, many advisors are asking themselves, “Should I get in on the action?”

It’s no wonder, as the industry’s macro-trends are all aligning towards consolidation, in particular:

  • Firm founders are reaching retirement age and looking for a succession plan and eventual exit but want to make sure their clients are in good hands
  • Competitive pressure, compliance requirements, and advancing technology is driving many smaller firms to seek consolidation
  • Strategic buyers are creating scaled wealth management practices, fueled by ready access to capital and low interest rates

Whatever the motivating factor, buying and integrating an advisory businesses is a highly complex, time consuming, and lengthy process that requires specialized knowledge, access to significant capital, due diligence resources, and skill sets that are often beyond most firms’ reach. In fact, when looking at the current deal frenzy, the majority of acquisitions are being made by large, sophisticated, and professional buyers who have a distinct advantage over smaller, lower capitalized, and less experienced players. At the same time, these professional buyers are looking at the billion dollar plus AUM marketplace, creating opportunities for smaller players to be able to participate in the industry consolidation.

In fact, smaller firms may consider a merger and acquisition strategy as a quick way to scale their businesses. Yet this inorganic growth path could potentially come at the expense of organic growth through prospecting. According to a recent whitepaper on this issue, Striking the Right Balance Between M&As and Organic Growth:

Advisors who want to scale organically need to have a technology strategy, just as they have a marketing plan or a business plan. A technology plan needs to be focused on creating the best client service possible…with the two key pieces of a technology plan focused on a strong client portal and CRM that work together seamlessly.”

The key takeaway is to have a balanced approach to growth, so firms can continue to delight current clients who then reciprocate with valuable referrals to fuel organic growth capabilities. At the same time, having a nimble, modern and scalable technology stack provides the leverage to be opportunistic when it comes to M&A deals and the ability to onboard firms that have not invested in the latest technologies.

Despite the consolidation occurring, there are still many, many organic growth opportunities for advisors as investors’ needs become more complex. Additionally, with so many choices for investment products and services, investors are looking to advisors to help them across an array of investing needs, exponentially increasing the demand for professional advice.

These many intersecting trends are setting the industry up for both growth and consolidation, leaving advisors with many strategic decisions when it comes to growth. To help you think through your options, be sure to download the complete whitepaper.

To learn more about how the Black Diamond® Wealth Platform can drive both your organic and inorganic growth opportunities request your personal demo, call 1-800-727-0605, or email