SUCCESSION PLANNING
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Communicating an Advisory Practice Merger or Acquisition to the Clients
By Tiffany A. Markarian
A merger or acquisition of an advisory practice may be a personal retirement or exit strategy for the principal(s) as well as an opportunity for the acquiring firm to realize fast growth. In any case, it can make all parties anxious.
Once the legal agreements and financials are in place, you need to communicate the news to affected clients and staff. Your communication strategy can make or break the long-term health and profitability of the transition.
Poor communications increase your firm’s transition risk—the loss of profitable clients or assets post-transition. Particularly in an acquisition, the acquiring firm is banking on a predictable, stable flow of recurring revenue and client development opportunities. This only happens if the highly profitable clients remain with the practice post-merger. For most financial firms, the top 10% to 20% of clients are responsible for the bulk of the firm’s revenue, in my experience.
Remember, regardless of what the overall financials and pro forma projections show, clients ultimately have a choice about with whom they do business.
If clients—particularly the highest-revenue clients—get spooked or made to feel uncomfortable by the news, your financials and business plan may suffer from client losses.
Positioning the News to Reduce Client Anxiety
All communications should strike a welcoming and gracious tone. The goal is to increase the clients’ comfort level, articulate the similarities and advantages to the clients, and provide assurance that clients will enjoy an experience that’s the same or better.
This is not the time for a standard form letter or an impersonal “who, what, when, and where” approach. Nor is it the time to copy a press release verbatim on your letterhead. Press releases are primarily about the benefits to both entities; your client announcement must clearly convey the benefits to the clients.
After clients read or hear the news, they may feel an immediate loss of structure or stability. It’s one thing if the clients’ long-term advisors and service team are staying with the firm post-merger; it’s another if this is an outright sale and exit.
Even if the clients’ trusted advisors and staff are remaining with the firm, clients may fear a change in process or resources. It’s not enough to say, “ABC Wealth Management and XYZ Planning are now operating as one” or “ABC Wealth Management and XYZ Planning have joined forces to provide a comprehensive wealth management experience.” The communication needs to be more welcoming, optimistic, and engaging.
Communicating Familiarity and Professional History
If you and the executives of the new firm have known each other for some time, tell your clients! It demonstrates camaraderie and trust among the parties. You don’t want clients thinking this is a fast, monetary takeover at their expense.
Here’s an example:
We have known the ABC Wealth Management team and its principals for over 10 years. What this means to you is we share the same personal and professional values in our investment and planning process. We have a common purpose in delivering exceptional financial and life planning experiences for our clients.
If your firms have not interacted over the years, let the client know there was a multilayered due diligence process to find the right fit. Emphasize the synergy and similarities between your organizations and what this will allow your clients to accomplish.
Reason for the Merger or Acquisition
There is a clear reason why this transition is taking place; be upfront with your clients about the positive aspects. Some possibilities:
- Create more scale through additional resources
- Expand into new markets
- Enhance the planning process and client experience
- Provide a well-deserved retirement strategy for the firm’s owner
If you explain the positive reasons for the transition, your clients and staff will often support it more.
Partner Retirement Strategy
If the acquisition is to support the retirement of one of the principals or partners, the principal should personally sign these letters and include a heartfelt message. Emphasize this was a carefully thought-out plan spanning several years and that they personally chose this new firm to take care of their beloved clients for years to come.
You might say something such as:
Just as we have helped plan your retirement, this merger helps me secure my personal retirement. I spent the last several years interviewing many different firms to find the right fit for my clients and my team. I chose the team at ABC Wealth Management because they will continue to provide the elevated service you have come to expect. Second, this merger will provide my staff with opportunities to expand themselves professionally within the ABC Wealth Management family. I will continue to work with you through the end of the year, and John and Maria will remain with the firm as your trusted advisors. We look forward to introducing you to the expanded resources at ABC Wealth Management and what this will help you and your family accomplish.
In Person versus Letter versus Email
Once you are legally able, your top clients and centers of influence should be told the news in person or during one-on-one Zoom meetings before receiving a letter or email.
You should respect these “A” relationships by personally discussing the advantages they will receive from the transition and addressing any specific concerns. You might even include the new principal(s) in these conversations to facilitate an ongoing relationship.
It is perfectly acceptable to notify your smaller clients with a letter and follow-up email or phone call. You might include an FAQ document or link to a landing page about the transition on your website. If you are digitally savvy, consider creating short videos from your team to share the news and next steps for the clients.
These steps further demonstrate your clients will continue to have a personalized experience during and post-transition.
Quotes from Partners and Principals
Your announcement should feature quotes from any key principals or the new chief executive officer. Transitions are more successful when the new leadership team takes a personal interest in the clients. Featured quotes should convey a warm, welcoming tone that inspires alignment with the clients’ goals. Clients want a leadership and advisory team they can follow.
New Name, Physical Office, or Contact Information
If the transition will result in a new physical office location or brand name, share the new address, logo, or website in the communication. Use your old firm’s stationery for this announcement so the letter is immediately recognized and opened. If nothing is changing, let the clients know this to increase their comfort level.
If there are new contacts or assigned service team members, include a “Who to Contact for What” sheet or PDF link with photos of each person.
Changes in Service, Fees, or Platform
If there will be changes to your clients’ custodians, advisory team, fees, or financial planning services, this needs to be communicated far in advance with clear instructions. Be sure to highlight the advantages of these new offerings and resources.
If there are no changes to the client’s platform, communicate this to alleviate any concerns.
Even if there are no changes, that doesn’t mean your clients won’t see it that way. You want to emphasize the continued consistency in the clients’ experience.
Steps Clients Must Take
If your clients must complete any consent forms or other repapering to move their financial planning agreements to the new firm, give them clear instructions along with the steps you will take on their behalf. Emphasize deadlines and how you will assist with any forms or required actions.
Show Thanks
At the end of your announcement or letter, thank your clients for their continued relationship and partnership. Let them know you are looking forward to the future and the outcomes this new relationship will create for them and their families.
Attachments and Literature
Also, you should include brief literature on the new firm that highlights the firm’s value proposition and introduces the principal owners. Share the new firm’s website so your clients can learn about the expanded resources available to them.
Remember to emphasize if you or your team members will be staying on post-merger. This provides great relief to clients and helps reduce transition risk.
Compliance
For everyone’s protection, your respective legal advisors should review the announcement and any communications before they are sent. Follow all protocols for client confidentiality, regulatory compliance, and human resource laws.
Tiffany A. Markarian is a marketing strategist and the founder of Advantus Marketing LLC. Her conference keynotes and consulting have helped financial advisors and wealth management professionals advance their marketing momentum since 1995. She can be reached at tiffany@advantusmarketing.com.
image credit: istock.com/FG Trade
