Professional Adviser: Wealth management M&A: Integration is the competitive advantage

Mergers and acquisitions are reshaping UK wealth management at an unprecedented pace. Research shows that in 2024, deal volumes outpaced the previous three years combined, and pace hasn't slowed, with more than 75% of firms planning to make acquisitions this year.

But it's not all good news. While the data shows the industry is consolidating, many firms aren't hitting the mark when it comes to the operational integration that's needed to unlock true value.

Without integration, consolidation is just accumulation. Bringing businesses together under one roof without aligning them under a single proposition and operating model can lead to diminishing returns. Integration is complex and not doing it well—or at all—can result in reduced financial benefits, attrition, lower productivity, and culture clashes. Thoughtful, but swift and efficient, integration is critical to long-term value creation.

Front-line integration

Fewer than 20% of wealth managers define their integration strategy before the ink dries on a deal. A potentially costly oversight, firms risk falling short on synergy targets, losing key advisers, and eroding client trust without a clear vision and roadmap. Integration can no longer be treated as a box-ticking exercise relegated to post-deal operations. It must be recognised as a strategic business imperative from day one.

Effective integration starts with a clearly defined end-state. What will the merged firm look like? How will advisers operate? What experience will clients have? Without this clarity, even the most well-intentioned deals risk losing momentum. Integration also means making early decisions on platforms, client segmentation, and operating models. Research shows that data migration and tech infrastructure are some of the biggest challenges firms face when integrating and are often also the most underestimated. Fragmented CRMs, legacy systems, and poor data quality can quietly stall even well-capitalised deals.

The firms that succeed are those that invest in scalable infrastructure early, prioritise clean data, and streamline systems around a common client experience. That doesn't require just money, but also leadership attention and operational alignment at the start of the integration process.

Hidden dealbreakers

Culture is still the most underappreciated risk in consolidation - and one of the hardest to fix. Misalignment on the approach to strategic investments, management style, or internal communication can derail a deal from the inside out.

Research shows a direct correlation between cultural missteps and adviser attrition. The biggest contributing factor is poor communication around what the deal means for advisers.

Many firms still underestimate how important it is to involve senior advisers in the integration process and to engage early with them on difficult topics like independence, reporting lines, or client segmentation. When integration isn't handled well, trusted advisers feel left out and leave, often taking clients with them. That's why the industry now sees below 5% "regretted attrition" as the benchmark for post-deal success. Beyond retention bonuses, achieving this level requires clarity, alignment, and buy-in on the future state of the firm.

Proposition to platform

If integration is the execution layer, proposition is the glue. One of the most compelling rationales for consolidation is the ability to offer clients a stronger investment and advice proposition, particularly through vertically integrated models.

But this only works when client segments are clearly defined, services are mapped accordingly, and teams are aligned on the vision. Poorly defined segmentation or uncoordinated investment teams can result in frustrated clients, adviser departures, and missed growth opportunities. On the other hand, firms that bring together advice and investment functions early in the integration process are better positioned to deliver meaningful outcomes like improved portfolio performance, more consistent client communication, and greater use of digital tools—especially for smaller clients.

Technology plays a crucial role here. With multiple acquisitions, firms inevitably inherit a long trail of smaller clients and a patchwork of systems. Centralising CRM systems, rationalising technology stacks and platforms, and investing in digital access are not just cost-saving measures, they're enablers of scalable service for the future.

New standard

As firms focus on organic growth and regulatory scrutiny around "prudent" consolidation intensifies, integration is becoming the defining capability of the next phase in UK wealth management.

Firms that treat it as a strategic function and not an operational afterthought will be the ones that deliver on the promises made at the deal table. Ultimately, it's not about how many deals a firm can make - it's about how well they bring them together.

Important information

The following information can be sourced to FoxRed Insight and Solve Partners:

• In 2024, deal volumes outpaced the previous three years combined, and pace hasn’t slowed, with more than 75% of firms planning to make acquisitions this year.

• Fewer than 20% of wealth managers define their integration strategy before the ink dries on a deal.