Why technology is crucial for RIAs focused on M&A

When Peter J. Raimondi founded Dakota Wealth Management in 2018, his goal was to establish a uniquely different company from the previous two he built. Leveraging his decades of industry experience, he set out to provide both an extraordinary environment for his colleagues and a well-honed approach to investment management.

The practice quickly expanded to several locations throughout the U.S., and we knew it was important to implement cutting-edge systems and processes not only to keep our offices connected, but to enable us to provide the best client service and investment management experiences wherever our advisers are based. As a firm focused heavily on M&A growth, we realized technology would play a major role in our immediate and long-term success.

When we launched, our strategy was to operate as though we were already managing $5 billion in assets. Even though we were a startup, we never thought of ourselves as one — we wanted to hit the ground running. To scale quickly, we began pursuing mergers and acquisitions of registered investment advisory firms with expertise that would both supplement and enhance the services our advisers were already offering.

When M&A is such a key element in a firm’s growth strategy, it often requires a flexible technology partner that can scale in parallel. A platform that allows for the transfer of data from different systems in a seamless, efficient, and user-friendly way should be a top priority.

For firms with a growth strategy similar to ours, it’s crucial when acquiring new advisory partners to instill confidence that the portfolio management platform powering the practice can deliver on the stated value proposition. Crafting highly personalized portfolios with investments uniquely suited to clients’ lives is one of the most important aspects of helping someone reach their goals. Cutting-edge, unified technology that enables the real-time, secure sharing of permissioned client data makes this possible.

When we set out in search of a wealth management technology provider, we looked for vendors whose platforms would allow us to customize everything from portfolios, client-facing reports and the user experience to suit the investment — and engagement — preferences of each client. Again, because our firm includes several practices, customization was key to our ability to integrate and unify those various processes and brand identities more easily.

After deciding on a platform, we took a collaborative approach to implementation, working closely with our new provider to get up and running. To make our rollout easier, we appointed several key people to new roles and created committees responsible for developing our new onboarding processes.

HOW INTEGRATED TECHNOLOGY MAKES M&A EASIER

Implementing a wealth management platform with input from team members who understand how advisers, clients and prospective M&A partners want to benefit from tech can position firms for long-term growth.

A unified wealth management platform that combines portfolio management, billing, trading and rebalancing, and reporting with a client portal makes M&A combinations easier to facilitate. Potential M&A partners need to feel confident that the practice they are joining forces with can accommodate and service their clients over the long term. They need to feel confident that client data will be protected and that they'll be able to elevate the level of wealth management service they can offer. Finally, prospective M&A partners need to feel confident that they'll be able to seamlessly transfer from their legacy systems to our cloud-based system relatively quickly.

Today, whether we're analyzing a specific data point in a region where we operate, or surveying client demographic data, we are able to find the valuable info we need in just a few clicks. This level of operational efficiency enables client-facing team members to focus their full attention on advising and engaging clients and their families, instead of cumbersome data entry or administrative work — which is very attractive for prospective M&A partners.

Furthermore, our integrated platform has been instrumental in helping us maintain normal operations while adapting to the changing work-from-home environment with minimal disruption. In the wake of COVID-19, RIAs have had to rely on digital technology to service clients and maintain operations, and our capability to operate fully in the cloud places us in a very strong position to grow and thrive in any environment.

While every advisory firm’s needs will be different, for us (and RIAs with similar M&A-driven growth strategies), a smart tech solution is necessary to effectively scale the business and serve clients well. No matter which tech platform and provider you choose (we selected Envestnet|Tamarac), your practice and clients can benefit from an intuitive, unified solution that's backed by a supportive, collaborative partner. A wealth management technology offering that helps RIAs reinforce and expand their value propositions is something prospective M&A partners find attractive — and if it is built for scale, such a tech solution can make the M&A process go smoothly from beginning to end, during and after each acquisition.  

[More: The 4 I’s of building your best tech stack]

Michael Reed is chief operating officer and managing partner at Dakota Wealth Management, a Palm Beach Gardens, Florida-based independent investment firm serving high-net-worth individuals and families.