Dave DeVoe, the long-time managing director of strategic business development at Charles Schwab’s RIA custody unit, has left Schwab Advisor Services to form DeVoe & Co., which will provide strategic and M&A consulting services to the advisor community, from “soup to nuts,” including valuation services and arranging financing for advisor M&A deals.
In an interview with AdvisorOne on Monday, the day his San Francisco-based company formally launched, DeVoe (left) said that advisors are entering a natural phase of consolidation, with the demographics of the advisor community—notably its average age of 54—helping to “nudge some people toward the exits.” Many advisors exhibit a poor readiness for succession planning, saying “it’s an important gap that many advisors need to close” and noting that only 40% of all advisors have succession plans at all, while many of those plans are not comprehensive.
DeVoe said that advisors are growing more sophisticated in their M&A activities, with many such mergers and acquisitions taking place for strategic reasons, using M&A to accomplish business goals outside of just growth.
As an example, he cites his first client, a California-based advisory firm that is considering two possible acquisitions—one of a firm with $125 million in AUM, and another with $250 million in AUM. In addition to adding significant assets, he noted that the first acquisition would increase the acquiring firm’s ability to manage assets internally, while the second acquisition would provide them with a hybrid platform to accommodate both fee- and commission-based advisors.
With his Schwab background and having worked on business strategy at American Express before joining Schwab, DeVoe said “the lens I look through” at M&A is a strategic one. In his work with advisors, he says he will begin by asking the prospective buyer, or seller, to “step away from the transaction, talk through the personal and business goals, and then talk about the strategic goals” that any transaction could achieve.
While at the moment DeVoe & Co. consists of DeVoe himself and administrative support, he said he has contracted with an investment banker (who formerly ran an RIA firm) who has already financed 15 such advisor M&As, and he hopes to add full-time personnel in 2012. He’s looking to release some research he’s conducted in early 2012 on the space; he said he also expects there to be some new, significant players in the advisor M&A space soon.