Bridgemark’s Nash On Making Your Best Transition

Chris Latham, Deputy Managing Editor,
Wealth Solutions Report

Jeff Nash Of Bridgemark Strategies Discusses ‘Feel, Fit And Financials’ When It Comes To Advisor Recruitments And M&A Deals

Financial advisor transitions are among the biggest decisions one can make in this industry. When an advisor is determining how to switch firms or conduct an M&A deal for their business, it may seem as though their whole world is in flux. That is where transition specialists can add real value for advisors. 

Jeff Nash, CEO, Bridgemark Strategies

To learn more about the process, we spoke with Jeff Nash, Chief Executive Officer and Co-Founder of Bridgemark Strategies, a Charlotte, N.C.-based consultancy operating nationwide and focused on the wealth management space. In this Q&A, Nash shares why he started his company, how he helps advisors think through their big move, and what he sees on the horizon for M&A activity.

WSR: Why did you start Bridgemark Strategies, and how have you grown the business?

Nash: Due to my past leadership experience working with national broker-dealers, I came to understand the priorities of both large organizations and their advisors. I have been providing recruiting and consulting services for financial advisors and their practices since 1999 and started my independent firm in 2014. Back then, there were internal recruiters who worked for firms, and industry recruiters who had a small list of favorite firms to which they would direct advisors. 

Advisors face a myriad of choices

Upon starting my own firm, it quickly became clear to me that nobody was dedicated to helping advisors through the myriad of choices they face, based on the differences that are important to them. Business has been good. Even during the pandemic, after a brief delay we had a stronger year in 2020 than in 2019. During 2021, we helped advisors to affiliate with 30 different solutions firms – RIAs, IBDs, custodians, banks and more – and we served many more advisors than solutions firms.

We got to this point by realizing that, when it comes to changing firms, there are three things that are absolutely crucial to advisors – Feel, Fit and Financials. I’ve actually trademarked “Feel, Fit and Financials” since our firm uses it regularly with advisors as a part of our business. When advisors evaluate all three of these things, they can make good decisions. When advisors don’t, they risk making bad decisions. This is true whether they switch broker-dealers, break away to the RIA space or engage in M&A. 

WSR: How do Feel, Fit and Financials factor into advisor decision-making when they seek to make a major move for their practice?

Nash: It starts foundationally with thinking through what you value in your career and in your life, then thinking about potential potholes and landmines in your business. This can help advisors clarify what they can live with, and what they cannot. 

Feel is about philosophical and culture alignment, your vision for the business and what’s necessary for you, personally. Commission-based advisors might not align well with fee-based firms. Passive investment management firms might not align well with active investment management firms. A firm’s overarching objectives will matter to advisors, in the long-term.

Fit is the business itself, from technology and resources to platform and products, that are essential for advisors to run their business at the client level. If you want full discretion over client assets, or to only outsource money management, the firm in question must be able to support that either way. Same goes for advisors whose clients have securitized loans or alternative investments. 

Don’t get blinded
by money.

Financials are crucial, but they are often negotiable and advisors should not fixate on them at the sacrifice of Feel or Fit. All too often, advisors whom we don’t work with can get blinded by a huge recruitment bonus, or valuation for a practice sale or an M&A equity stake, only to find three years later that the money does not compensate for the reality of their decision.
 

WSR: How open should advisors be to different types of solutions firms? 

Nash: Most advisors have a preference for the type of solutions firm they want to work with, but it pays for them to keep an open mind. It is common for advisors to come to us thinking they know what they want only to be pleasantly surprised by a firm with another model.

Sometimes W2 employee advisors discover that becoming 1099 independent advisors would solve all their needs, and sometimes independent advisors discover that becoming employees would suit them better.

We have 130 different agreements with firms divided into nine different categories, and we have talked with well over 200 firms since 2014. So when advisors state a preference for a type of firm, we ask them why they have that view and how they think that type of firm would solve their needs. That line of questioning often leads the advisor to see that they have more to learn about different models. 

I have an advisor right now who has two choices, an IBD and an RIA. The advisor is evaluating Feel, Fit and Financials for both firms. Each firm offers very different features, so we are exploring which features at each firm are most useful to the advisor’s business. This process of prioritization tends to produce a winner.

WSR: What are you seeing for the wealth management M&A market going forward, and why do you have that view?

Nash:
Over the past two years, we have seen a large increase in M&A activity that could stay at pace or even accelerate over the next few years. The succession planning trend and private equity appetite for practices is certainly part of it, but much of the deal flow is due to advisors in their 40s and 50s looking for a growth track. 

Many older advisors want to stay on at their firm while some younger advisors there want to attain liquidity by becoming full partners in the business. Private equity is especially focused on advisors who have at least another decade of growth momentum and maximizing efficiencies ahead of them. It’s not just the value of the book of business, but the value of the advisor generating that book of business. 

The robo-advisor frenzy has faded.

However, advisors should consider the M&A market beyond the next five years. It is quite possible that, within the next 10 years, several of today’s most active private equity-backed firms or strategic buyers might not perform as well. For example, less than a decade ago acquirers were in a frenzy to target robo-advisors, but that craze has clearly subsided. 

So I caution advisors not to base their own retirement planning on high valuations and multiples that might not materialize in the future. Instead, they should plan on how to maintain organic growth themselves and how to recruit high-performing advisors to their teams. These are things advisors have more control over, and working on them can improve their business now.

Chris Latham, Deputy Managing Editor at Wealth Solutions Report, can be reached at clatham@wealthsolutionsreport.com

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