The “sell and stay” approach in wealth management mergers and acquisitions (M&A) is a transformative trend reshaping how Advisors approach their succession planning and business transitions.
According to industry research, there has been a rising number of sales of SEC-registered ($100M+ AUM) RIAs annually in the last five years — and a growing number of seasoned professionals are embracing the multifaceted strategy of selling and staying.
This forward-thinking alternative to the usual exit models offers a nuanced pathway to monetize their life’s work while maintaining meaningful professional engagement. Read on for more insights from our senior consultants into the evolving mindset around M&A, succession, and retirement.
The Convergence of Market Forces and Succession Planning
The wealth management industry stands at a critical crossroads. Market volatility, demographic shifts, and increasingly complex regulatory environments are compelling independent RIAs to reimagine their long-term goals.
This trend represents far more than a temporary phenomenon. It signals a fundamental shift in how financial professionals conceptualize business succession, professional legacy, and strategic growth.
Traditionally, selling a financial advisory practice meant a complete professional departure. The sell and stay approach challenges this paradigm, creating a cutting-edge hybrid model that allows founders to monetize their business while retaining meaningful influence and continued professional relevance.
Several crucial factors are driving this evolution. First, the aging demographic of industry leaders necessitates robust succession planning. Many experienced Advisors are not ready to retire entirely, but recognize the need to secure their legacy and ensure continuity for their clients. The sell and stay model provides a pathway to achieve both.
Simultaneously, the wealth management industry is navigating a period of heightened market volatility and economic uncertainty. Fluctuations in interest rates, inflation, and geopolitical events create a complex environment for investment analysis.
In this context, the stability and resources offered by well-established firms become increasingly attractive. Selling to a larger entity provides access to the latest technology, expanded service offerings, deeper research capabilities, and greater multiples in a sale, all of which are vital for navigating turbulent times.
Why Today’s Advisors are Embracing Sell and Stay
One of the primary motivations for RIAs to consider a sell and stay arrangement is the opportunity to capitalize on their practice’s value without relinquishing total control.
In an industry where constant growth is essential to maintaining equity, some Advisors have found themselves in a position where delaying a sale could result in financial losses. By selling while the practice value is high and continuing to work, you can secure your financial future while maintaining an authoritative identity.
Focusing on Preferred Aspects of the Business
The sell and stay path allows wealth management experts to shed the less enjoyable responsibilities and focus on the aspects of the work they’re most passionate about.
Whether it’s strengthening client relationships, mentoring younger Advisors (or reverse mentoring), or pursuing business development, this approach enables experienced industry pros to craft a role that aligns with their passions and interests.
Overcoming Burnout and Reinvigorating Careers
Burnout is a significant issue in the financial advisory landscape. In a 2022 study by the Financial Planning Association, 63% of investors experience high or moderate stress, while 71% of Advisors admit to being stressed out.
Sell and stay strategies offer a solution by allowing you to tap into the resources and energy of a successful organization while maintaining its client relationships. This shift can breathe new life into your career, providing renewed purpose and motivation.
As Advisors progress in their careers, many seek ways to balance professional commitments with personal life goals. The sell and stay journey offers increased flexibility, allowing more freedom to cultivate a fulfilling new chapter.
Smoother Client Transitions
One of the most critical aspects of any advisory practice transition is client retention and asset transfers. This model minimizes client attrition by avoiding rushed transitions and inspires lasting loyalty.
During turbulent economic times, clients seek stability. Selling to a firm with robust infrastructure while maintaining your presence alleviates the burdens of compliance, HR, and cybersecurity, allowing Advisors to focus on more high-value projects and client continuity.
Leveraging Expertise and Experience
Buyers benefit from the institutional knowledge, client relationships, and industry expertise of seasoned Advisors who choose to stay on after the sale. The sell and stay arrangement allows for knowledge transfer and mentorship opportunities, contributing to the overall growth and development of the acquiring firm’s talent pool.
With the wealth management sector experiencing increased M&A activity, this path helps meet the growing demand for strategic acquisitions. It provides a win-win solution for firms looking to expand their client base and sellers seeking liquidity without a full exit from the wealth management space.
Successful sell and stay transactions require careful planning and due diligence: thoroughly evaluate potential buyers, negotiate favorable terms, and establish clear expectations for the ongoing role.
Open communication and a collaborative effort are essential for ensuring a smooth transition and a successful long-term partnership.
The senior consultants at TERRANA GROUP have over three decades of experience helping Advisors forge exciting new futures — let’s start the conversation today!
