The winners will not necessarily be the firms with the biggest ambitions. They will be the ones with the strongest partnerships.Dilok Klaisataporn/iStockPhoto / Getty Images
An increasing number of wealth management firms are positioning themselves to capitalize on the approaching advisor succession wave, but many lack the expertise or the capital to execute deals.
In Canada, the market is both fragmenting and consolidating. Advisors are aging, clients expect broader service and smaller firms face rising compliance and technology costs. The opportunity is real, but executing an acquisition-driven growth strategy is difficult.
That’s why the next wave of winners will not necessarily be the firms with the biggest ambitions. They will be the ones with the strongest partnerships.
M&A is hard, even when the market is in your favour
Many wealth management teams view acquisitions as a straightforward lever: find retiring advisors, offer a fair multiple for their books of business, integrate and grow. In practice, the process is far more complex for these reasons:
Building seller relationships takes years, not months: The most attractive transactions are rarely marketed openly. They’re negotiated quietly in advance and built on trust, shared values and a credible transition plan.M&A processes fail more often than commonly acknowledged: Deals frequently collapse because of misaligned valuation expectations, cultural fit issues, transition risk, or concerns about client retention. In a people-driven business, integration risk is always present.M&A absorbs management attention: Time spent on due diligence, negotiation, financing and integration inevitably reduces focus on clients, advisors and recruiting.
The latter point is the core issue. Most firms don’t fail in mergers and acquisitions because they choose the wrong targets, but because they underestimate the burden of running an acquisition strategy alongside a high-performing wealth management business.
Cameron Passmore, chief executive officer of PWL Capital Inc., noted the challenge of growing without the necessary capabilities or capital when he spoke on the Rational Reminder podcast about his firm being acquired by U.S.-based OneDigital Investment Advisors LLC.
“To help more people, it requires a certain amount of platform, scale, abilities, expertise and balance sheet,” Mr. Passmore said on the podcast. “That’s the reality.”
The partner landscape: more options than most firms realize
Partnership in wealth management is often framed as a choice between selling to private equity or remaining independent. That view is outdated.
Today, firms can choose from a broader range of partners:
Supportive dealers can provide financing, operational consulting and infrastructure that reduces friction during integration.Private equity firms offer growth capital, M&A expertise and disciplined execution, but typically expect accelerated growth and a defined value-creation timeline.Strategic partners, such as asset managers, are increasingly exploring ownership or partnership models to strengthen distribution and client relationships.
Hybrid structures are also emerging that combine elements of the above, including minority investments, joint ventures and models that aim to preserve entrepreneurial culture while enabling scale.
Still, private equity remains the most supportive long-term option for some firms. Wellington-Altus Financial Inc. CEO Shaun Hauser, whose firm last year sold a minority stake for $388-million to U.S.-based private equity firm Kelso & Co., made this point on The Diamond Podcast for Financial Advisors. “The most expensive way to finance your business is through private equity,” he said, but it allows you to “play the long game.”
How to choose the right partner: Three questions that matter
Choosing a partner is not about brand recognition, but about fit. In practice, three attributes matter most.
1. Financial support: How real is the capital?
Every partner claims to have capital. The real question is whether it’s committed, structured appropriately and aligned with your strategy.
Is there dedicated acquisition funding, not just growth equity?Is the capital patient enough to withstand deal delays?Does the structure allow you to retain meaningful ownership and upside?
Without a repeatable funding model, firms risk completing one deal and stalling – often the worst outcome.
2. Operational support: Who is doing the work?
A partner should reduce management burden, not add to it. Beyond capital, firms should ask whether a partner brings real integration support, experience scaling advisor teams, and the ability to professionalize recruiting, compliance and technology. Partnership only creates value if it improves execution.
3. Timeline and exit pathways: What are you building toward?
Some firms want a long-term, permanent partner. Others want to scale aggressively and exit in five to seven years. Neither approach is wrong, but misalignment is costly. Firms need partners that share their definition of success, whether that’s a liquidity event or long-term independence with institutional support.
Joe Millott is a partner at Fort Capital Partners, an independent investment bank that specializes in wealth and asset management mergers and acquisitions, with offices in Vancouver, Calgary and Toronto.