Improving technology essential for M&A preparation

Intelliflo has emphasized the importance of refining technology and data management processes for financial advice practices looking to pursue mergers and acquisitions (M&A) opportunities. A white paper released by the technology provider titled “Advice, evolved: A new era in Australian financial advice” highlighted seven trends that are expected to shape the profession in the coming five years.

The identified trends include changing the perception of advice, adopting consumer-friendly payment models, recognizing technology as the foundation of operations, transitioning towards an adviser-led system, expanding reach through scalability, creating a whole-of-life pathway for clients, and engaging with younger demographics.

In particular, Intelliflo underscored the significance of achieving scale to address the issue of accessibility in financial advice. Currently, only one in 10 Australians seek advice from a financial adviser. To tackle this challenge, many practices are contemplating consolidation through mergers and acquisitions to augment growth and scale. The entry of global private equity firms into the Australian wealth management sector has further fueled interest in M&A activities among practices seeking expansion opportunities.

Intelliflo’s report indicated that the financial advice sector is poised to become a focal point for M&A transactions, with a surge in activity witnessed already and more anticipated over the next half-decade. The report noted a substantial influx of investment into Australia, with investors actively seeking takeover targets. Concurrently, practices aiming for growth are increasingly recognizing the potential for partnerships and collaborations with other businesses to capitalize on market opportunities.

The primary obstacle for advice practices considering M&A deals lies in aligning their processes, organizational culture, and strategic goals. Inconsistencies in technology infrastructures used by different firms can pose challenges during the integration phase, emphasizing the importance of meticulous preparation and planning in advance.

According to the white paper, successful advice businesses involved in M&A transactions are enhancing their valuations by clearly articulating their methods of formulating and delivering advice. By streamlining processes, leveraging technology effectively, and ensuring a cohesive organizational culture, advice practices can position themselves strategically for successful M&A ventures in the dynamic financial advice landscape.