Mitigating the psychological impact of advice M&A

With AMP advisers moving to Entireti and Insignia being the subject of a private equity bidding war, how can deals be navigated to ensure minimal stress and uncertainty for staff and advisers?

Mergers and acquisitions (M&A) can be an uncertain time for staff and it is expected the activity will be a key trend in financial services in 2025.

At the end of 2024, Entireti completed its acquisition of AMP’s licensed and self-licensed advice divisions, seeing over 800 advisers move to the licensee.

However, preliminary Wealth Data numbers show Entireti lost 90 advisers during 2024, 59 of which were from the AMP licensees it had recently acquired. This was followed by Count which lost 74, mostly from Merit Wealth licensees which it gained as a result of the acquisition of Diverger in March 2024.

In terms of future M&A, Insignia Financial has received three bids from private equity firms to acquire 100 per cent of the company. The first one in December 2024 was for $4 per share from Bain Capital, which was rejected by the board, followed by a bid for $4.30 per share from CC Capital and an equivalent bid from Bain Capital-  – both of these are yet to receive a response from Insignia. 

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Insignia already enacted its own staffing changes last year when it split its advice division into two and advisers at Consultum and RI Advice became Rhombus Advisory, – a standalone business led by Darren Whereat. It also divested Millennium3 at the end of 2023 to WT Financial and Godfrey Pembroke in March 2024.

Mitigating uncertainty 

For employees, M&A and the associated uncertainty can be a highly stressful experience as they fear for the future of their jobs under a new owner. 

While a deal is being reviewed, teams may get smaller as staff depart and firms are reluctant to hire replacements, salaries may come under scrutiny amid cost-cutting, and workloads may increase as remaining staff take on extra tasks or gain new responsibilities associated with ensuring the deal’s completion. 

Once the acquisition has completed, this is not necessarily the end of the turmoil as staff adjust to a new culture and ownership, especially if the buyer is from overseas, and determine if this is a business where they are happy to remain. 

According to the Harvard Business Review, roughly 33 per cent of acquired workers will leave a firm within the first year of an acquisition. 

Speaking to Money Management, Max von Sabler, clinical psychologist at MVS Psychology Group in Melbourne, said: “M&A often triggers significant uncertainty and stress among staff. This uncertainty can lead to emotional responses like fear, frustration, or even disengagement, especially if employees feel undervalued or uninformed during the process. 

“Social identity theory highlights how employees’ attachment to their company’s identity plays a crucial role in their psychological response. When their organisation undergoes significant change, this identity is often disrupted, leading to feelings of loss or resistance.”

For staff at both AMP and Insignia, both firms have a storied history and as a result, many advisers will likely have worked at the firm for a significant period of time and have loyalty to the business. This includes working through the turbulent Hayne royal commission when both firms came under heavy scrutiny. 

Other advisers may have joined the firms as a result of M&A themselves, such as when Insignia acquired MLC from NAB, so this will be their second (or more) experience of M&A activity.

How firms can help

As for how firms can help their staff to mitigate this uncertainty, von Sabler said it is crucial to ensure changes are communicated in a transparent manner to prevent any staff anxiety or rumours spreading. 

This includes providing regular and timely updates even if the news is bad, acknowledging staff concerns, clearly articulating what will change and what will stay the same, and engaging middle management to feed developments to their teams. 

When it comes to maintaining staff, he said staff would value being informed on what their role at the new firm would look like and being incentivised to stay. 

For Entireti, chief executive Neil Younger said at the deal’s completion in December, the firm would be ensuring it maintained sufficient resources to provide advisers with the support they need as well as demonstrating the benefits of technology.

“Each business had existing resources for their advisers, and we’ve had to ensure that continues to be in place for each brand. We also have our own resources and shared resources which will give support and services to the whole group. We have 180 employees, so there is a depth of resources available there,” he told Money Management.

“AMP has a strong, full service offering, and we are committed to ensuring that continues, so more of the same, but over time we want to evolve it. We want the advisers to stay with us.”

Following the Diverger acquisition, chief executive Hugh Humphrey told Money Management that Count worked hard on its “people, culture, leadership and governance” and that there had not been “any regrettable departures” from the acquisition.

Von Sabler made the following recommendations to retain staff:

• Involve staff early: People are more likely to feel invested if they’re included in discussions about the transition, even in a limited capacity.
• Offer career clarity: Highlight growth opportunities in the new structure and ensure employees see a future for themselves in the organisation.
• Strengthen engagement programs: Initiatives like mentoring, team-building activities, and skills training can help employees feel supported and valued during transitions.
• Financial and non-financial incentives: For roles critical to the business, retention bonuses or clear long-term development plans can make staying more attractive.
• Focus on wellbeing: Stress levels tend to rise during transitions, so offering counselling services, resilience training, or flexible work arrangements can signal that staff wellbeing is a priority.