A live panel discussion at Nicsa's 2024 Strategic Leadership Forum, M&A Hotbed, delved into the market-moving M&A deals that are dramatically altering the asset and wealth management industry.
The panel was moderated by Jeff Stakel, Deloitte Consulting. Panelists included Jeb Doggett, Chief Administrative Officer, Polen Capital; Dan Houlihan, President, STP Investment Services; and Amrit Kanwal, Executive Vice President and Chief Financial Officer, MFS.
The session explored the complexities and challenges involved with mergers and acquisitions (M&A) in the asset and wealth management industry. The speaker emphasized that unlike in other sectors where acquisitions are often based on tangible assets like technology or revenue lists, the asset and wealth management industry poses unique difficulties in defining what is being acquired. While assets are part of the equation, the intangible nature of financial services requires a deeper dive.
“There are three primary reasons that acquisitions get done: access to a new distribution channel, access to new product capability, or it’s a scale issue.”
Acquisitions in the asset and wealth management industry are often made for reasons such as expanding distribution channels, acquiring new product capabilities, or achieving scale. However, they cautioned that M&A necessitates a clear strategy for adding differentiated value to the client. The speakers emphasized the importance of clear client messaging during the M&A process, underscoring the need to articulate the value to clients clearly.
“The thesis is really putting the client first and being able to bring a broader capability set -- an extension of the value proposition -- to the client.”
The session homed in on the importance of maintaining a strong organizational culture amidst M&A changes. While acquisitions can lead to expanded opportunities for the acquiring firm, they also introduce risks such as client relationships being jeopardized. The speaker emphasized the need for careful consideration during acquisitions to ensure the best aspects of both organizations are retained.
The panel also explored the concept of partnerships as an alternative to traditional acquisitions. It suggests that as the industry matures, firms should think more creatively about collaborating with partners to access capabilities efficiently without bearing the full burden of integration costs.
Furthermore, the discussion touched upon the evolving preferences of institutional investors and advisors regarding the number of asset managers they engage with. While breadth of capability is valued, investors are not necessarily seeking solutions from every manager. Instead, they prioritize high-quality, value-adding capabilities, indicating a shift towards a more selective approach in engaging asset managers.
Overall, SLF attendees received a solid foundation on the complexities and strategic considerations involved in M&A within the asset and wealth management industry, highlighting the importance of client-centricity, organizational culture, and meeting the evolving needs of investors.
Personal views and observations of individuals contained herein are as of the date of the live event or written material and do not necessarily reflect the views of Nicsa or its member organizations. May contain forward-looking statements subject to various uncertainties. Nothing herein is intended to be or should be construed as legal advice. The information contained herein is for informational purposes only and does not constitute a recommendation of best practices.
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