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Fidelity Launches M&A Program for RIAs, Including Access to Financing

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Fidelity Institutional Wealth Services announced Tuesday a suite of offerings designed to help its RIAs address the issues of growth, and succession planning, through mergers or acquisitions of other advisory firms.

David CanterDavid Canter (left), the Fidelity IWS executive VP who heads Fidelity’s advisor practice management efforts, said the new offerings—which include discounted access to outside M&A consultants and discounted financing through Live Oak Bank—are part of a “suite of components we’ve been building up over the past four years.”

Those components, he said, include insights and education from Fidelity and advisory firms who have been through a merger or acquisition; access to experts, such as the M&A consultants; matchmaking between firms that might be interested in some kind of business arrangement with each other; and now access to financing.

“What I’ve seen is that advisors want to grow through acquisition, but they don’t have the knowledge” of how to do so, Canter said. He also pointed out that there’s a “big bid-ask spread” between what prospective sellers think their firms are worth and what buyers are actually willing to pay for those firms. That is why Fidelity IWS is “trying to supplying all the building blocks” to help with transactions that can take much time and are fraught with emotion, not to mention differing, complex deal structures.

“When we think about M&A and business combinations in general, we try and offer up real-life insights and education to help firms get started,” says Canter. Then, “if they’re really serious” and want to proceed, they can talk to advisor M&A consultants such as David Selig of Advice Dynamics, Frank Kettle of Colchester, Dave DeVoe of DeVoe and Co., and Paul Lally of Gladstone, outside consultants “who can help them evaluate their options.”

Live Oak, he said, not only “couldn’t be more excited” about their participation, but since it is a community bank focused on lending to small and midsize businesses, the bankers “understand professional services” firms like advisory firms, understand the revenue stream those firms generate, and are resident in their communities.

”They’re committed to the advisor business,” said Canter, and will “lend to our clients with a high level of service, with a differentiated service model, and provide discounted pricing.”  

Live Oak, Canter said, “is not your father’s bank, but is your grandfather’s bank”—that is, committed to the local community. In addition to providing loans for mergers and acquisitions, Live Oak Bank will also offer loans for internal succession plans and for breakaway brokers. Live Oak’s founder, chairman and CEO, Internet bank pioneer James “Chip” Mahan, and his team are “country gentlemen,” Canter said.

Fidelity, says Canter, doesn’t receive a fee from Live Oak for any loans made to advisors.

Check out 3 Successful M&A Exit Strategies on AdvisorOne.