Diamond Consultants’ Louis Diamond On Best Practices For Advisor Recruitment And M&A

Chris Latham, Deputy Managing Editor, Wealth Solutions Report

Louis Diamond Of Diamond Consultants Discusses The Evolution Of His Family’s Business, Prevailing Recruitment And M&A Market Conditions, And Considerations For Financial Advisors Seeking To Join Or Sell Wealth Management Firms

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. 

To learn more about the process, we spoke with Louis Diamond, President of Diamond Consultants, a New York metro area-based recruiting and M&A business operating nationwide for the wealth management space. His mother, Mindy Diamond, started the business in 1998 and remains its Chief Executive Officer. His father, Howard Diamond, serves as Chief Operating Officer and General Counsel.

In this Q&A, Louis Diamond shares his insights on the evolution of the family’s business, prevailing recruitment and M&A market conditions, and considerations for financial advisors seeking to join or sell wealth management firms. 

WSR: How has Diamond Consultants evolved since it was first founded, and what are your goals for Diamond Consultants over the next few years?

Evolving business landscape

Diamond: Some 25 years ago, Diamond Consultants started by working exclusively with wirehouse advisors and recruiting only for a handful of firms—not because we wanted to be limited, but because, at that time, advisors didn’t consider venturing beyond these “traditional” options.

While our approach has always been focused on the advisor’s needs first, that methodology expanded with the post-financial crisis evolution of the industry landscape, particularly the growth and popularity of the independent space. Today, we work with experienced advisors (focusing on the largest teams) in every industry channel.

We can represent advisors and independent business owners at over 300 different firms across the entire swath of the industry—wirehouses, regional brokerages, boutiques, multifamily offices, RIAs, platform providers, independent broker-dealers and everything in between. Since we started tracking this metric in 2009, we have effectively represented advisors whose total accumulated assets under management surpass $250 billion.

As President, my goal is to further our mission of meeting advisors where they are to provide objective and confidential counsel and ultimately make Diamond Consultants synonymous with advisor due diligence. Like how one might think of a real estate agent when buying a home, I want advisors to immediately think of calling Diamond Consultants when they are curious about the landscape of opportunity and want professional representation.

And always looking for ways to continually expand our reach when it comes to sharing knowledge and providing education to the advisor community—important components of our firm’s core values.

WSR: How would you describe prevailing market conditions for two distinct groups – experienced financial advisors who are seeking to join a new firm, and successful firm owners who are looking to sell their business?

No need to settle

Diamond: For experienced financial advisors, it’s the strongest “seller’s market” in transition we’ve ever seen. Since there isn’t one firm or channel of the industry that’s capturing most recruits, we’ve seen firms step up their recruitment deals dramatically to win the race for top talent.

Likewise, with today’s greatly expanded industry landscape, advisors are much more likely to find their ideal firm or model than ever before without having to settle. Most advisors will remain in their industry channel when transitioning (e.g., IBD to IBD), but every firm faces stiff competition from a multitude of firms across the industry.

For firm owners looking to sell, like the recruiting side, it’s a very robust seller’s market. By our count, there are approximately 50 different private equity sponsors invested in acquisitive platforms, resulting in some incredible acquirers with real firepower behind them and too small a pool of sellers.

Even though the stock market pulled back at the end of 2022, it hasn’t stopped firm owners from coming to market since most are pursuing transactions for nonfinancial reasons like capacity, succession, accelerating growth or broadening capabilities, and these factors are still at play.

WSR: What major considerations should each of those groups keep in mind when trying to attain the best financial terms in their deals?

Competition drives valuation

Diamond: It’s the same answer for both segments. Competition drives valuation—meaning you need multiple credible bids to put you in the control position and provide the most amount of leverage to negotiate.

Patience, coupled with several viable options, gives the advisor the upper hand.

Even though this industry is often a meritocracy – with the size of a transition package or valuation determined mainly by the scale of a practice – at the end of the day, it’s a people business. And the person on the other side of the table wants to fight for those they like and respect.
Being organized and methodical in a due diligence process shows well, and forecasts to a firm that you are serious about doing a deal or making a transition, which could translate to superior terms.

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

1 comment

Comments are closed.

Related Posts

Sign Up for Our Newsletters

Sign Up for Our Newsletters