Driving change or creating disruption in your firm can be challenging, but we would argue it is one of the best ways to spur significant growth. Disruption forces you out of your comfort zone and requires you to do things differently, which can open doors to new opportunities.
Change for many RIA firms often comes in the form of M&A activity — both as buyer and seller. The third quarter of 2021 hit a record number of deals and the industry is on pace for yet another record-setting year. Although pursuing M&A may seem daunting, it can help firms rapidly achieve growth that would take years to realize on their own.
Realizing the benefits of disruption are daunting, and it is something our team discusses with advisors across the GVA network and beyond every day. Here’s what we tell them:
Change goes both ways
M&A has the potential to benefit both the buyer and seller in regard to resources and talent. In many situations, the acquiring firm has more dynamic platforms and tools that can be leveraged by the acquired firm to advance their business. However, we’ve also seen situations where the acquired firm had access to a technological resource that the acquiring firm previously didn’t, and was able to start utilizing thanks to the transaction.
When advisors partner with GVA, they gain access to both a wide variety of resources and an expansive network of fellow advisors. In turn, we welcome fantastic new talent who bring different skills and expertise that can benefit both our leadership team and advisor network. When there is chemistry between the buyer and seller, M&A can be a win-win situation for all involved.
Deciding when to make a change
At GVA, there are two transaction scenarios we often encounter. The first is an advisor who wants to disrupt their entire practice to partner with a firm like GVA for added resources and scale. They are taking a chance because they think it’s the best move for their business over the long-term. The second situation is when an advisor decides they want to sell their business or hire a junior advisor in order to build a succession plan. These individuals are seeking a true succession plan, while looking to safeguard their legacy and their clients’ experience.
In both scenarios, there is always a compelling reason that triggers the decision. Owners of financial advisory firms do not lightly decide to sell their business or merge with a new partner. These are huge changes that must be approached with proper deliberation.
At GVA, we always ask advisors who are considering some form of M&A, “What’s the reason for this decision?” Advisors looking to partner with another firm often want to leverage the buyer’s resources and platform to grow their business and enjoy more support. Advisors seeking to build a succession plan, especially those who are reaching retirement age, typically want to enjoy life experiences that they can’t while managing a $150 million to $200 million book. For instance, they may want to travel more or spend increased time with their families. We ask this pointed question to ensure our motivations, outlook and philosophies align from day one so we can build a successful partnership.
Addressing the emotional aspect
For many small business owners, the decision to sell their practice is an emotional one. Accordingly, the buyer should understand and respect the emotions driving the decision. As a seller, it’s important that you feel a connection to and synergy with the buyer. The primary focus isn’t necessarily on how much money you can get for the business or any other individual benefits the sale might yield.
The decision should also be rooted in what will be best for the business’s growth and your employees.
Ask yourself what the structure will look like for your clients and the team. For your clients, will they work well with the potential acquiring firm, and will they enjoy new resources as a result of the transition? For your employees, will there be more opportunities for growth than are available to them now? It’s crucial that the acquiring firm will not only be able to handle your business, but also offer your clients and employees greater advantages.
Calculate the risk
At GVA, we sit down to calculate risk with every advisor who is considering partnering with us. We’ll talk through various scenarios to ensure their vision for their firm’s future and their growth goals align with what GVA can offer. This requires extreme transparency, and may entail telling advisors that their expectations aren’t realistic or perhaps we aren’t the best fit. But in the end, it allows the advisor to decide what is best for them.
M&A can help firms reach their goals and achieve growth that might be very difficult to attain organically. However, a successful merger or acquisition depends on aligned visions and synergy between partners.
Throughout the past two years, the pandemic has slowed down or completely halted many businesses. Yet, the RIA industry has seen a surge in interest and growth which has exceeded many RIA leaders’ expectations. With growth expected to extend well into the next year, future-looking leaders stand ready to tackle the next challenge and solve the next problem.
At GVA, CEO Ryan Todd leads the way for new and innovative ideas to keep the firm on the leading edge of the RIA industry and positioned as an attractive partner for growth-oriented advisors. His passion for the financial services industry was sparked at a very young age, watching his father grow his CPA practice, and has only grown with time. Ryan was inspired to launch GVA in response to a significant gap that he saw in the RIA industry. Instead of finding workarounds like many other people would do, Ryan started from ground up, building a business that could effectively solve problems for advisors everywhere.
His passion remains strong, and he has a steadfast approach to propelling advisors ahead in their career paths through personalized advice from his own life experiences and through a hands-on approach to integrating the tools that they will need along the way. We recently spoke with Ryan about how he brings the GVA mission to life every day, the impact he’s made on countless advisor practices and his goals for the future. Here’s more from our conversation:
What is your leadership style at GVA and why is this perspective so beneficial to GVA advisors?
We run an open-architecture style business here at GVA. COO James Spinelli and I are behind the scenes working day and night to build the GVA brand and improve the offerings for advisors, while advisors work independently to run their businesses however they think is best. This approach empowers advisors and allows individuality and creativity to flow throughout GVA.
Importantly, though, the behind the scenes work that we do at a management level is very comprehensive and critical to our larger mission. In our industry, every RIA is seeking growth by adding new advisors, and along the way are making promises of ways they can help advisors grow their practices. Unfortunately, not many RIAs actually live up to the promises they make and instead, offer the bare minimum to advisors. James and I work as a team to come up with new and innovative ideas that will make a difference in the lives and practices of our advisors. At GVA, we are committed to delivering on the promises we make, and this truly sets us apart.
How does your past life and professional experience influence your approach to leading GVA?
I started out in the industry by buying my father’s CPA business from him. While the initial focus was on the accounting and tax side of things, many of my clients in that business were looking for financial planning advice, too. Instead of sending them out the door to seek that advice elsewhere, I decided to go out and obtain the credentials needed to service them myself. This is why I became a CPA. From there, I built out the business and it started me on the path to where I am today.
GVA has been strategically designed from day one. There was a major gap in the industry that James and I were looking to fill. Advisors would go to their RIA and ask them for advice and ideas to grow the business or better service clients. They would get the ideas, but then it would be up to them to implement those ideas. We are hands-on, diving into advisors’ challenges and practice management concerns. We not only will offer thoughts and ideas, but we will actually put those words into action alongside you.
You have founded other successful businesses in the past. How does your past entrepreneurial experience relate to your current day-to-day?
I’m known among my friends as a serial entrepreneur; I have started businesses and failed and started again. If there is one thing I have learned, it’s that things don’t always go as planned. I work with many advisors who are successfully running their businesses and others who have failed just like I have in the past. I like to offer complete transparency with our advisors when it comes to mistakes they might be making or areas where they could improve their business. My past mistakes were all learning opportunities that help me better direct our advisors. This personal experience really means a lot to GVA advisors and they value my honesty and frankness. The fact that James and I have both been in their shoes, gives our advisors confidence and legitimizes what we offer to advisors here at GVA.
How did your experience as an advisor inspire you to design GVA in the way that it serves advisors first?
When James and I started in this industry 13 years ago, the landscape was significantly different. The industry has evolved and advisors are looking for different things now than they did back then. GVA understands that needs, demands and objectives change rapidly and we are well-positioned to evolve with advisors.
In the beginning, I never would have thought that technology would play such a large role in this business, but here we are now and technology is the cornerstone of the entire industry. One of the best and more recent examples of this is social media. Many advisors come to us and tell us that they are very interested in social media and growing their business that way. Although this is not the way that I did things or one of my personal focuses, I still have to have an understanding of the value of social media in spreading word, building a brand and creating an identity.
Being in the industry for as long as I have has given me this ability to see things from another perspective and be nimble enough to change with the times. You can never be too humble as a leader in this industry – it is crucial to be open and accepting to change and equipped to navigate anything new that comes our way.
Where do you look for advice, inspiration and insight in your career?
There are two people in my life who offer me two different perspectives, both of which value greatly.
The first is my wife. I turn to her and tell her what I am going through or a situation I am trying to navigate and she offers me a third party viewpoint from someone who is not in the industry. She’s not afraid to call me out and let me know when I am wrong. Her unfiltered advice truly drives many of the decisions that I make.
Another source of inspiration for me is my father. When I was a kid, my eight siblings and I had no idea how much work my dad put into his business on a daily basis. He managed to come to every single baseball game, every family dinner and be there for all eight of us, while working as hard as he did. What we didn’t realize is that he went back to work at 9 p.m. every night once we all were in bed. I was 10 years old when I told my dad that I wanted to take over his business; his response was that I didn’t work hard enough to run a business. His take surprised me and he offered advice that remains with me today: “the only way to do it, is to do it.” This became my mantra. From that point on, my grades went up and stayed up. In college I never skipped class like many friends and roommates did, and I pushed myself every day to put in the work that my father did.
I strive to be as hardworking as my father is, while still dedicated time and energy to my family. Every night at 9 p.m. when my kids are in bed, I follow in my father’s footsteps back to the office to put more work in. To this day, I often quote exact phrases that he has said to me to our GVA advisors. My dad continues to be a part of it through the advice that I live by and pass along to other advisors.
When the idea of GVA came to fruition, I was scared. I remember texting James saying that I had an idea and after discussing it, James quit his job and we started working to bring that dream to life. Both of us were lucky enough to witness our dads building businesses from the ground up as kids, which gave us more confidence knowing that it could be done if we put the work in and remained dedicated.
Lastly, another source of inspiration for me is running. I run every day to clear my head. After a good long run, I feel like I just solved all of the world’s problems in 60 minutes.
What do you feel is the most important thing for advisors to learn about GVA as they are getting to know you?
From where we were in 2014 to where we are now, I truly believe that we can match up to any of the larger RIAs in the industry. Our close relationships and family atmosphere exceed what could be expected at a larger firm and we have the same offerings, plus the ability to implement them ourselves for advisors. There is no micromanaging in the GVA atmosphere and all advisors are free to run their businesses how they see fit.
We are committed to growing this company and making it thes best advisor experience possible. Anyone who joins us in this journey is treated as their own entrepreneur. We offer the help, technology and support but allow advisors to choose what they want to participate in and come to the table with any other needs they might have. Advisors at GVA are constantly building on this open-architecture platform and adding to their offerings through GVA.
At GVA, we are a community that lifts each other up. We equip our advisors with the tools and technologies that they need to succeed and watch them grow. We truly believe that this is the philosophy that allows for the most long-term success and look forward to continuing to add to our offerings for our team and pushing them even further along in their personal journey.
For more insight on the GVA culture, leadership philosophy and opportunities for advisors within our network, schedule a call with us. Connect with us on LinkedIn and Facebook for our latest insights and team updates.
Advisors’ worlds have been completely revolutionized within the past two years, as they’ve navigated shifting terrain in the regulatory landscape, managed a transition to remote work and subsequent return to the office, and faced mounting pressure from clients concerned about the ongoing coronavirus pandemic.
These changes have prompted many advisors to reevaluate their businesses and approach to the profession, especially regarding where they seek support. Many advisors are turning to advisor networks ― groups of like-minded advisors coming together to achieve a common goal ― in their pursuit of ongoing business growth and personal development.
Great Valley Advisor Group (GVA) is anchored by a culture of connectivity most readily seen through our advisor network. We have thoughtfully designed a model that allows our advisors to operate independently while still being part of a larger team, surrounded by the knowledge and insight of other advisors. As advisors look to the future and seek avenues for continued growth, aligning with a network presents an appealing opportunity.
Cornerstones of the GVA Advisor Network
GVA’s strategically designed, well-curated advisor network drives success and provides a supportive and productive community for members, based on four cornerstones:
- Transparency with our partners: We pride ourselves on our commitment to communication with advisors. This means initiating an open dialogue and maintaining candid conversations around what is or isn’t working, where specifically they need more support and how our team can do more to propel their success. These conversations must be frank, and rely on our leaders and advisors coming together, but the resulting transparency and corresponding experience are unmatched.
- Facilitating strong advisor relationships: The strength of the GVA network doesn’t come from the top, but from within. We look to our advisors, themselves, to help advance the network as a whole by engaging with fellow advisors, learning from one another and sharing experiences and advice along the way. Advisors who join the GVA network need to be willing to have these types of conversations, and those who engage at this level truly flourish.
- Making a consistent and considerable investment in tools: GVA’s business model is built on a foundation of technology and innovation. From day one, our leadership team recognized the importance of implementing strong technology systems, as well as comprehensive tools and resources, and the impact this makes on advancing an advisor’s practice. GVA network advisors gain immediate access to our dynamic technology stack and robust solutions to support their growth.
- Providing ongoing support aimed at advisor practice growth: Our work with advisors extends well beyond technology and related tools. We identify their areas of need and how they want to grow, and then implement targeted support and solutions. Our M&A team is a great example of this philosophy in action. Our advisors are entrepreneurs who seek to grow their businesses, and the M&A team offers a clear path forward for such inorganic growth, providing insight on the acquisition process, preparing relevant documentation and information, reviewing deals and more.
A Near- and Long-Term Plan for Growth
The strength of the GVA network lies in our ability to consistently adapt to the changing environment. Our primary goal is to empower advisor growth, and we feel strongly that a well-curated network of advisors is the best way to do that.
Advisors who join our network realize immediate benefits, coupled with longer-term advantages. The network provides a centralized platform yielding high levels of efficiency that advisors cannot leverage elsewhere. The suite of technology and resources they need to create an immediate impact on the business and streamline operations are available at their fingertips.
From a broader perspective, the network’s focus is strengthening our partnerships with advisors and creating the connectivity they need to thrive. We provide resources and the advisors offer insight, innovation and growth to the platform. We strive to continue enhancing our offerings to advisors within the network and realize that both parties add structure as we grow. We select advisors who are innovative in nature and maintain a similar philosophy and outlook on the business landscape.
The feature we plan to implement in the near future is small advisor forums within the larger network, creating connections among advisors facing common challenges or seeking to uncover similar opportunities within their businesses. We are using these as a springboard for stronger relationships within the network and to share valuable insights into where our advisors are taking their practices, so we can add new solutions and services.
Finding Your Network Match
For growth-oriented advisors, finding the right network to align with can make a significant impact on your business. The right network partner is one that shares your values and communication style but celebrates diversity among its community. Diversity in opinion, focus and life experiences will drive a stronger network and add significantly more value for the advisors.
Every advisor who joins the GVA network shares our larger vision and goals for the future. The growth of the company is only as strong as its core, and our advisors are the core of everything we do.
Mergers and acquisition activity in the RIA industry continues to grab headlines and make history. Despite early setbacks from the coronavirus pandemic, 2020 dealmaking activity bounced back, and Echelon Partners recorded a record-high 205 deals closed last year. The pace has not slowed in early 2021, with Q1 activity achieving a 65% increase over the first quarter of last year.
Our team remains active in the M&A space as well, both at the corporate level and in supporting our partners in completing their own acquisitions. Our team has completed several successful acquisitions throughout our history, and we have built a dedicated M&A team to support our advisor partners as they evaluate acquisition opportunities.
We work closely with advisors who are active acquirers, as well as connect with potential partners for GVA, and are regularly connecting with potential sellers about their objectives. We have seen several common themes emerge from our conversations with sellers regarding what they are seeking in a partner. Here’s what we have observed as the top trends on the sell-side.
A consistent experience is paramount
The acquisition process is inherently disruptive, but for many positive reasons. In some aspects, consistency facilitates a stronger partnership and more seamless transitions. One thing RIAs often look for is a partner who uses the same custodian. Transitioning custodians can be catastrophic for RIAs, a major operational burden that brings a risk of client attrition. Our firm is aligned with LPL Financial, one of the leading custodial platforms in the nation. Our relationship with LPL has been a driving factor in some of our most successful acquisitions and partnerships, making it easier for partner firms to plug into the GVA model on day one.
Enhanced resources and tools close deals
Sellers are not just selling to make a specific profit; they want a clear understanding of how they will benefit from joining your firm. They will be seeking clear details on the resources available to them and how those resources will be delivered. These two factors come together to complete the overall deal structure and help sellers differentiate between potential buyers.
At GVA, our partners come to us because of our in-house expertise, executive leadership team, extensive technology and operational support services, as well as resources for retirement plan consulting and asset management. We most commonly hear clients ask about access to myself and my partners. We make it a priority to stay actively engaged with our advisors and are consistently creating solutions that facilitate even better communication.
Culture and the impact on staff cannot be overlooked
While the firm’s owners are dictating the sale, the entire firm — from advisors to front-office staff — will be impacted by the transaction. The advisors, the relationships they’ve built with clients and the work they engage in every day are some of the main drivers behind the sale, yet they rarely see financial gain from the actual transaction. Keeping a focus on culture creates an environment where advisors can continue to thrive and allows for a more seamless transaction.
We understand that the sales process is incredibly personal for the seller and we make it a priority to be transparent and responsive throughout the process. We make ourselves available to the entire acquisition partner’s team, ensuring their advisors and support staff have their questions answered, too.
Growth needs to be a mutual priority
Advisors who are aligning with another firm are largely motivated by growth prospects. They want the ability to continue running their business the same way, while having access to added resources, tools and scope to up-level their practice. GVA has built a structured firm with open-architecture features and flexibility for our advisors. Our team is growth oriented, and our goal is to help our partners achieve their goals.
As the sales discussions progress and planning becomes more actionable than aspirational, it’s important that both buyer and seller maintain a flexible perspective. While purchase price is almost always the deciding factor, there are certainly plenty of other opportunities to showcase value. Understanding the mindset of the seller is an important starting point.
PAOLI, Pa. — May 11, 2021 — Great Valley Advisor Group (“GVA”), a technology-driven full-service registered investment adviser (“RIA”), has acquired U.S. Financial Advisors (“USFA”). The acquisition expands GVA’s presence in the Greater Boston, Massachusetts, region and adds to its overall wealth and investment management capabilities for high-net-worth (“HNW”) individuals.
Based in Braintree, Mass., USFA is a full-service RIA that provides comprehensive and customized investment, insurance and wealth management services for its clients. Under the leadership of President and Chief Executive Officer John Napolitano, CFP®, CPA, USFA has grown to over $725 million in assets under management and has a network of advisors across the county. The full USFA team is joining GVA. Napolitano will lead GVA’s dedicated HNW practice, which will maintain the USFA branding and offer family office services. The HNW practice will include five additional advisors.
“John and his team have built a strong reputation of excellence in the industry,” said Ryan C. Todd, CPA, Chief Executive Officer and Managing Director of GVA. “Their experience and expertise in serving the HNW base aligns with our focus on elevating our offering and positioning us for future growth. We are excited to integrate the USFA team with our GVA community.”
Napolitano added: “The team at GVA shares our approach to client service, our passion for wealth management and the dedication to growing our advisors’ careers. Our partnership with GVA and the resources its leadership team offer will support our focus on building a dedicated HNW practice and providing the integrated and comprehensive support this specific client group needs.”
“Our focus is on empowering and supporting advisors to grow their businesses, and the relationship we have built with John and his team is a perfect example of this philosophy in action,” said James J. Spinelli, Chief Operating Officer and Managing Director at GVA. “John is clear in his vision and where he intends to make the most impact in the next phase of his career. We are thrilled he is aligning with GVA to make this vision a reality.”
GVA has focused on growth in recent years, strategically adding resources that will benefit the advisors in its network. The firm introduced its dedicated asset management arm, Valor Asset Management in 2016 and has expanded its in-house technology resources and tools for advisors in the last five years. GVA has completed several successful acquisitions in its history and has built a network of nearly 100 advisors across the country. The firm was supported by LPL Financial’s M&A Solutions new premium buyer program in completing the USFA transaction.
“The GVA team has been strategic in its development, building the right capabilities and structure to support a deal of this magnitude,” said Jeremy Holly, LPL Senior Vice President and head of Advisor Financial Solutions. “Our M&A Solutions team supported GVA and USFA throughout a formal sales process, positioning GVA as a qualified and value-added buyer and ensuring the firms were a good fit. We believe this acquisition will be a true benefit to their current and future clients.”
The acquisition closed on May 10, 2021, and will increase GVA’s assets under management by over $725 million. GVA was advised by Stradley Ronon. Financial and legal terms of the deal were not disclosed.
About Great Valley Advisor Group
Great Valley Advisor Group (“GVA”) is a technology-driven full-service registered investment adviser. GVA partners with select independent financial advisors by providing customized technology, investment strategies, compliance, and proprietary compensation tools to help them grow their businesses. Our advisors have the choice and flexibility to run their businesses the way they want. GVA provides advisors with support to get started and technology to help the firm thrive.
For more information, visit greatvalleyadvisors.com.