Fifteen years ago, Nesvold notes, there were roughly four mergers a year in his industry. In 2005 there were 65, although those numbers are likely significantly understated because Berkshire only tracks firms with at least $200 million under management; a relatively small deal like FSAG’s purchase of Viking would not be included. Indeed, merger activity is so strong that services have sprung up to match buyers and sellers. Charles Schwab, for example, launched a service for wealth managers two years ago that uses custom software to pair wealth management firms looking to sell with those looking to buy. That is how Viking and FSAG found one another. In November, Schwab Institutional’s Advisor Transition Support website showed listings from 250 firms that were intent on buying, and approximately 80 firms (with about $7 billion under management) that wanted to sell, according to David DeVoe, director of the Schwab division. Unfortunately, investors are barred from peeking to see if their advisor is on the site; it is password-protected and only available to the advisors themselves.

If and when an advisor completes a merger, his clients sometimes find themselves thrust into a personal, often complicated bonding ritual with someone they have never met. Because many clients consider their wealth manager to be among their most trusted advisors, any change, let alone multiple changes in that relationship, can be as unsettling as a nasty divorce. Clients of J. Bush & Co., a Connecticut wealth management firm founded by Jonathan Bush, the president’s uncle, have seen the 35-year-old firm change hands three times since October 1997. Few advisors, and even fewer clients, would be eager to put up with that kind of upheaval.

"The major mistake that tends to get made is that new owners get rid of the relationship manager, which means that the firm will probably lose the client," Nesvold says. Other problems crop up when an independent entrepreneurial firm merges with a large established firm. Marks, for one, says he never would have been happy winding up at a large firm. For him, working with a boutique was critically important.

Straight Talk
Even if a client has no control over his advisor’s decision to retire or merge, an investor can steel himself against upheaval. He can have one last face-to-face meeting with his advisor to get a clear picture of whether his advisor will be staying with the new company. He can discover what prompted the sale in the first place (although getting any candid answers may not be particularly easy) and research the acquiring firm. Keep in mind that most deals are structured so that a selling firm is paid for each client who switches to the new firm. Clients should not be reluctant to use this leverage with a long-standing advisor to obtain some straight answers. Investors should insist on as many details as possible about proposed changes in the structure of the new firm. Any type of significant change, such as an office closing or an advisor leaving, and even cosmetic shifts, such as the old firm’s name coming off the door too quickly, can cause anxiety.

"The biggest line in any merger is that things will always be the same."

However, when a firm decides to merge in order to be able to offer additional services, clients can actually be left with the best of both worlds: the same advisor with supplementary tools to help investors manage wealth more efficiently. This happened several years ago at Atlanta-based Balentine & Co., a firm with some 44 clients and $4 billion under management. An entrepreneur who had sold his business for several hundred million dollars in cash was planning to move to a company that offered fiduciary services. Determined not to lose that client, Robert M. Balentine, who established the firm with his father, Bob, in 1987, sought out a partner and wound up merging in 2002 with Wilmington Investment Management, a unit of Delaware-based Wilmington Trust. But Balentine says he was adamant about keeping the Balentine name on the door, in part to reassure existing clients that, despite the new owner, the firm felt strongly about maintaining its former identity.

Of course, even the smoothest mergers are likely to yield their share of problems. Changing the infrastructure of a firm, from computer systems to corporate policies, will cause frustration for at least some clients, not to mention the firm’s employees. And any change presented in the fee structure–a common occurrence in most mergers–is likely to prompt at least a few angry phone calls. But, as with most issues, fees can be negotiated, particularly if the firm is eager to retain existing clients. "The biggest line in any merger is that things will always be the same," Balentine admits.

The upside for most clients is that after both companies work out their details, investors often wind up with access to a greater number of services and, in the best situations, a more diverse group of wealth managers who are familiar with a wider range of products and strategies. When Nulsen was trying to convince Roberts that the change was good, he stressed that his client would now be able to communicate with four experienced advisors instead of one. Last May, when FSAG’s three partners came to Indianapolis to meet with Roberts and his wife at their home, Roberts grilled the younger men. He came away satisfied and has remained so. "They were very articulate, very concerned and did a great job of convincing me," he notes.