So in March 2005, when Nulsen called Roberts and told him that he had sold Viking to Financial Solutions Advisory Group (FSAG), a larger firm in Chicago, Roberts did not know quite how to react. "I had a significant amount of anxiety because I had chosen him very carefully," Roberts says. "Because of him, I was sleeping well at night."

Though Roberts says he trusted Nulsen and knew that his advisor would not dump him with just anyone, he did not like the fact that the new firm was located more than 200 miles away or that each of FSAG’s three partners was younger than Roberts’ son. But when the partners met with Roberts and Nulsen in Indianapolis and reassured Roberts that Nulsen would remain involved for at least a year, it did not take long for Roberts to start feeling a bit more comfortable.

Today, increasing numbers of affluent investors, many with the same firm for decades–dating to the time the modern-day wealth management business really began–suddenly find themselves summarily passed from their familiar firm to another. Over the past few years, merger mania has shaken the financial planning industry, creating many frustrating changes for clients. In some cases, small independent firms like Viking are selling to larger independent firms like FSAG. Meanwhile, larger independent firms–including those with $1 billion or more under management–have been acquired by even larger trust companies or regional banks intent on expanding into the wealth management business.

In part, this trend toward mergers and consolidation is driven by the demographics of financial managers. "A lot of [advisors] are mindful that when they approach their 60th birthday, the value of their practice begins to decline," says Elizabeth Nesvold, managing director at Berkshire Capital, a New York firm that provides merger advisory services. The age of the advisors comes into play because the purchase price is usually based on how many clients make the move to the new firm. Conventional wisdom holds that older advisors are less likely to stick around the new firm than those in their 40s or even 50s, which means their clients might not stay either. Recent research by JPMorgan Asset Management found that more than half of advisors working with affluent individuals are 50 or older, one indication that the move to merge is likely to continue–and possibly even accelerate.

Exit Strategies
Of course, many clients are not even aware that they stand the risk of being wedged between two merging firms; few of them find out that their advisor plans to sell before a deal is signed. At that point, investors have essentially two options: move their money and wait while a new firm gets up to speed on their various assets and investment strategy, or keep their wealth in place and risk equal frustration if their current advisor exits the scene and the merged firm struggles to get up to speed.

TOP VIEW: With more than half of all financial advisors nearing retirement age, the current pace of mergers and acquisitions in this industry is likely to accelerate. But even a firm’s most important clients may not learn of a merger until after it closes. Small changes in a client-advisor relationship can signal an impending merger and spur smart investors to prepare for the worst. But not all mergers are bad for clients; some provide additional resources and scope without reducing personal attention.

The best approach is to be prepared for such a contingency. A typical merger or acquisition can take as long as two years to consummate. During that period, most advisors tend to be reluctant to say anything to their clients, primarily out of fear that the client will bolt before the deal is done. Clients, especially those tied to older advisors, should learn to read the signs: their advisor becomes easily distracted; he suddenly takes more time to return calls or emails; or a normally talkative advisor becomes very reserved, as if trying to hide something. An advisor who displays one or more of these signs is at best failing to serve a client’s needs and may be planning a sale.

Entrepreneur Howard Marks had been a client for several years of myCFO, a wealth management firm launched in the late 1990s by Netscape entrepreneur Jim Clark to provide comprehensive services for wealthy families, when he noticed such changes. A cofounder of the video game company Activision, Marks sensed that his advisor, Rob Francais, whom Marks says he trusted completely, was acting differently; he never told Marks what was really going on. As it turned out, myCFO was suffering serious problems, and partners like Francais were planning to leave to start their own firm. At the end of October 2002, myCFO was sold to Harris, a wealth services conglomerate based in Chicago. Francais and three other partners in the Los Angeles office left to start Quintile Wealth Management, which now has about 30 clients–including Marks–and manages about $1.4 billion.