Industry gets it all wrong, says CEO

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The chief executive of a leading business broker believes the financial services industry is on the wrong track with sales, mergers and acquisitions.
Connect Financial Service Brokers CEO Paul Tynan says the industry has been wide off the mark for years and he is “certain” the industry will get it wrong again in 2014.
“The financial planning sector has a 30-year track record of failed acquisitions which today is reflected in the loss of client value, advisers, management and capital investment written off.”
This failure to get it right is not restricted to one segment of the industry – it is prevalent from the largest corporate to the small suburban practice, he says. 

“Large corporate businesses do not have a monopoly on failed transactions, I have also seen small businesses and individual financial planners make the wrong decisions based on their last [business development manager] or [product development manager] conversation or whoever has the biggest cheque book.”

For advisers, wrong decisions include joining a badly-chosen dealer group, leaving the right dealer group, taking on an unsuitable partner, and selling when they should not, Tynan says.

Other circumstances where the process is likely to go wrong include when the financial planner or dealer group principal is not mentally engaged in the process and wants to move on as quickly as possible. Cultural issues and whether staff “fit” is also important to the success of any sale, merger or acquisition, says Tynan.

 “Whether selling, merging or acquiring, it is important to understand that the process takes time in order to achieve the desired outcome and in many cases, the parties will only have a single opportunity to do it right.”

According to Tynan, people who make the wrong decisions have one or more of the following factors in common:

·         Thinking only in the short term
·         Lack of industry knowledge and insight
·         Lack of networks and resources
·         Did not have mergers and acquisitions experience
·         Did not plan properly
·         Focused only on the bottom line figures
·         Did not think about the business culture
·         Personal or unforeseen circumstances saw them               rush to do the deal.


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