Building ‘super firms’: The power of expansion capital and digital presence

Mergers and acquisitions are nothing new in the financial advice sector, but according to Verse Wealth CEO Corey Wastle, both the emergence of expansion capital and social media marketing are reshaping the way firms are approaching growth.

“[There are] two trends I think are more emergent,” Wastle said on The ifa Show. “The first one is expansion capital. The idea of having access to expansion capital as an advice firm 10 years ago in Australia wasn’t really there. It’s really only in the last three to five years those opportunities have started to show up.”

The presence of greater expansion capital, Wastle believes, is seeing a greater level of consolidation in the Australian financial advice sector through equity partnerships.

“Regularly, we’ll have private equity firms now reaching out, wanting to have a casual coffee or a conversation,” he said.

This trend has seen greater levels of consolidation, emulating the American market, which has seen decades of consolidation. In fact, American private equity firms, such as New York-based Merchant Wealth, for example, has a minority position in Coastal Advice and recently helped facilitate their merger with Calder Wealth Management.

For firms looking to grow into the “super firms of the future”, Wastle noted that having access to this kind of capital can allow investment across a range of areas, from people and technology to marketing and operationalising the business.

“That is incredible leverage,” he added.

“It’s exciting that we’re now seeing that in our industry, in our profession, because it’s going to make for better businesses in the future.”

Another trend Wastle identified is the growing digital presence some financial advisers are building, in particular through social media, as part of an organic growth strategy.

“I think we’re seeing businesses get more organic growth than they’ve gotten in the past. At the same time, we are seeing businesses capitalise on that by getting a lot better at marketing,” Wastle said.

The growing phenomenon of “finfluencers” is one indication of this trend, and though several finfluencers have given the practice a bad name, their adoption of social media highlights the growing marketing savvy many financial advice services are developing.

For Wastle, if expanding your business footprint into the digital world through social media, your intentions should be to educate, not to garner fame.

“if you’re coming from the standpoint of, you’re not trying to broadcast but you’re trying to give value, you’re trying to educate the people that want to be educated and the people that are interested that want to consume your content,” he said.

“If they do, it’ll come up in their feed. If they don’t, it won’t. They won’t know you’re there. If you are talking to the right people and giving real value and educating them, not just with tips around tax time and super contributions and how to invest, but behavioural finance stuff – how do you make good decisions, what biases impede your decisions, these types of things.”

Wastle added that in large part, it’s more about the “quality of the content as opposed to the amount of followers that you have”, urging advisers not to compare themselves with the most prominent voices on social media.

“If you can produce content of value that people want to engage with, it will find its people.”

To hear more from Corey Wastle, tune in here.