National wealth management firm Hightower today published an in-depth study on the human aspects of acquisition strategy and execution in the RIA industry, called Finding the Right "Fit:" The Four Personality Factors that Drive Successful RIA Acquisitions.
The report was created with market research firm Riedel Strategy and a team of social scientists, who developed a scientific approach to help advisory businesses considering a transaction find the right cultural fit.
"While the industry has many avenues to help advisors think through the business considerations of an M&A transaction – from valuation and deal structure to operations – interpersonal compatibility often falls by the wayside," said Bob Oros, CEO of Hightower. "We hope this study can be an informative resource to enable advisors considering a transition to find the best possible fit for themselves and their teams."
The study found that for both the acquiring and target firms, four personality factors play a key role in the long-term success or failure of a strategic partnership.
- Culture – What motivates a firm's relationship to clients and colleagues. The research found four personality orientations related to culture: Innovation and creativity (Visionary); Success and achievement of goals (Achiever); Efficiency and integrity (Protector); Togetherness and mutual well-being (Nurturer).
- Drive – What an advisor is driven to accomplish with his or her business. The research found three personality orientations related to drive: Aggressively grow and scale the business (Builder); Optimize work-life balance (Optimizer); Slow down and transition ownership (Transitioner).
- Passion – What an advisor loves most about being an advisor. The study found four general orientations related to passion: Growing and running a business (Entrepreneur); Optimizing systems and operations (Engineer); Building and managing portfolios (Investor); Working with clients (Coach / Guardian).
- Control – A firm's relationship to leadership and change. There are four personality orientations related to control: Comfortable with change and letting others be in charge (Delegator); Comfortable as long as I have a seat at the table (Democrat); Not comfortable giving up control to others (Autocrat).
To help those on the verge of a transaction make informed decisions, the researchers used these factors and orientations to create a four-step personality test, empowering them to identify partnerships best suited for lasting success.
The report gives advisors and enterprises a framework to understand their individual and firmwide personality factors and use them to clearly define their approach to business, know what questions to ask and zero in on potential blind spots.
For example, an advisory business with an 'autocrat' orientation to control may need to find a larger partner that will allow them to run their practice as they see fit, while an advisory business with a 'coach/guardian' orientation to passion will want a partner that empowers them to spend more time serving clients.
This article originally appeared on PR Newswire.
