Key Highlights
- Acquisitions can make an RIA larger without making it easier to operate. Centralized teams can only create leverage when firms share common processes.
- Shared technology doesn't guarantee easy integration. Firms often configure the same CRM, reporting, or planning platform in very different ways.
- Technology decisions typically start with the ideal client and service model. Paying for the most robust system adds complexity when the firm has no practical need for much of its functionality.
- Operations can become a competitive advantage because they determine how consistently a service business delivers for clients. Technology supports that advantage by reinforcing the operating model.
- AI may eventually make data easier to use across disconnected systems, reducing some of the integration burden that has long challenged RIAs. Claims of dramatic productivity gains, however, remain ahead of what many firms can demonstrate today.
Integration determines what growth delivers
Growth through M&A can quickly expand an RIA, but successful integration should give the larger firm greater operational leverage. That typically requires enough consistency across the combined firm for shared resources to work across teams. However, centralized functions can only do so much when each group maintains different workflows, reporting standards, and service processes.
Technology is part of that challenge, even when the underlying systems are the same. Firms can configure the same CRM or reporting platform in significantly different ways, leaving workflows that still need to be reconciled. That’s why technology decisions should start with the client and service model. By defining who the firm serves, deciding how that service should be delivered, and then choosing technology that supports it without adding unnecessary complexity, firms can align their tech stack more closely with how they actually operate. AI may eventually ease some of the technical burden by making data easier to use across disparate systems, though near-term claims of dramatic efficiency gains still warrant skepticism.
In this episode of Inside WealthTech, Coldstream Chief Operating Officer Matt Sonnen breaks down what growing RIAs need to integrate, where technology fits, and why operational discipline matters more as firms expand.
Rapid-fire reflections
Sonnen’s responses to Inside WealthTech’s speed round sharpened his view of where operating advantage comes from and where firms may still be getting ahead of themselves:
- RIA operations: A competitive moat when operations translate a firm's service model into a consistent client experience.
- M&A integration: Done well, it can accelerate growth. Done poorly, it can damage culture.
- Unified ecosystem or best-of-breed: AI could make the debate less important if firms become better at working with data across separate systems.
- AI in advisory operations: Early hype today, with significant long-term potential.
- Institutional scale or boutique specialization: Both have room to succeed. Large firms are likely to continue expanding, while smaller RIAs can compete by serving tightly defined client niches.
Sonnen’s answers leave room for different firm models, but place a premium on being deliberate about how growth, service, and operations fit together.
Stay Inside WealthTech
Watch the full episode of Inside WealthTech with Matt Sonnen for more on M&A integration, operational leverage, technology decisions, and the evolving role of AI in RIA operations.
And follow along on LinkedIn for upcoming episodes spotlighting the leaders redefining wealth management through technology, data, and collaboration.
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Full Transcript
Envestnet Inside WealthTech – Coldstream
Envestnet Inside WealthTech – Matt Sonnen
Blake Wood:
Welcome to Inside WealthTech. We're live here at Elevate in Phoenix, Arizona. My name is Blake Wood, Head of Strategic Partnerships.
Vibhaw Arya:
I'm Vibhaw Arya, Head of Strategic Relationship Management for the RIA segment. Joining us today is Matt Sonnen, Chief Operating Officer at Coldstream. Matt, thank you for doing this.
Matt Sonnen:
Thank you. Glad to be here.
Blake Wood:
Maybe you could give us a quick pitch on Coldstream? And while we're at it, tell us a little about the COO Roundtable podcast that you've been hosting.
Matt Sonnen:
Yeah, well, Coldstream first.
Coldstream just celebrated our 30th anniversary. I just celebrated my third anniversary at the firm.
We're growing organically and inorganically. When I joined in 2023, we were around $6.5 billion of AUA, and we just passed $14 billion of AUA, so I've been busy.
We have about 250 employees and nine offices in the Pacific Northwest. Our headquarters is Bellevue, Washington. We have several offices in that general area and about 70 employees in Portland, Oregon.
We have 10 wealth management teams. Two were homegrown. Eight have come through mergers.
In addition to wealth management, we have some complementary business lines. We own an investment bank. We own a property and casualty insurance business that our clients love. We also offer an alternative investments fund as a diversification tool.
Since I've joined, we've acquired two accounting firms, so we're working at consolidating those under one and then bringing tax services in-house for clients.
The last thing I'll say that makes us unique is that at $14 billion in AUA, we do not have any private equity backing.
One of the panelists yesterday quoted that there are 77 RIAs in the country over $10 billion, and at least 90% are PE-backed. I don't know if those numbers are exact, but directionally they seem right. That makes us a little unique as well.
Blake Wood:
That's fantastic.
So tell us a little bit about the podcast.
Matt Sonnen:
Oh yeah, the podcast.
I've been doing COO Roundtable for eight years now. We're on episode 80-something. I do it once a month. That's all I can commit to.
This is the chip on my shoulder about operations in the RIA space.
Our industry loves to say, "Well, you're in the back office. You don't bring in clients, so you're completely expendable. You're just a cost center."
Blake Wood:
Yes, exactly.
Matt Sonnen:
So this was my chance to push back on that. I interview two operations professionals per episode, and we talk about the daily struggles and challenges and the value they bring to their firms.
I'm very passionate about that, and I've continued doing it.
I was doing it before joining Coldstream, and Coldstream has allowed me to continue producing the podcast.
Blake Wood:
I'd love to get some more thoughts on that.
You've spent your career helping RIAs scale operational efficiency. What separates a scaled RIA that institutionalizes its operations from firms that simply get bigger?
Matt Sonnen:
Yeah, I think we're seeing this in real time with firms like Focus and Hightower.
It's very easy to get advisors to join your firm if the pitch is, "You're an amazing wealth management firm. We're going to give you a nice check. Come here. Keep your logo. Keep your tech stack. Keep your processes. Don't change anything."
It's easy to get them on board.
But then you wake up one day and you've got 90 firms and no scale. There's no operational leverage. You can't centralize anything.
How can the centralized performance reporting team help 90 different firms when every performance report is different? How can a centralized client service team help onboard clients if there are 90 different onboarding processes?
There's just no operating leverage.
I'm not talking about chopping headcount, but you can't get operational lift if everybody is doing things differently.
The firms doing it right are fully integrated. Public and private markets have proven they place more value on firms that can offer operational leverage to the teams joining them.
Vibhaw Arya:
Agreed.
You just hit on it, the word integration.
Given your experience with M&A and your conversations with COOs and operations leaders over the years, what do firms underestimate about building a scalable integration engine?
Matt Sonnen:
I was talking about this at dinner last night.
The biggest mistake people make is assuming integration will be easy because the technology is the same.
"You're using Tamarac? I'm using Tamarac."
"You're using Salesforce? I'm using Salesforce."
They assume that means it'll be easy.
But there's so much customization within these tools. My onboarding workflow inside CRM may have 14 steps and yours may have nine.
How are we going to combine those and determine what the new onboarding process should be?
I always tell people that merger integration is going to involve tears. We just don't know where they're going to be.
Is it the financial planning integration? Is it the CRM integration?
There's going to be a hiccup somewhere.
The firms that do it right are the ones that give integration leaders the flexibility to work through those challenges.
Vibhaw Arya:
You mentioned that Coldstream has remained employee-owned.
Does that create a different operating discipline, and how does that benefit clients?
Matt Sonnen:
Obviously, we're constrained.
We don't have an unlimited checkbook that we can invest in technology and headcount. But where it really helps us is that there's no mandate to do a set number of mergers every quarter or every year.
We need a real business reason to do a merger.
Maybe the firm is in a client niche we're interested in. Maybe it's in a geography we're interested in. Maybe there are people at the firm that we'd like to bring into leadership positions.
We don't do deals just to do deals.
And I think that helps clients because we're not creating complexity and distraction unnecessarily.
Without PE backing, we don't have a dedicated merger integration team.
Our head of performance reporting is doing performance reporting for the whole firm, and then when we have a merger come on, he gets distracted. He has to help move data from Black Diamond or another system into Tamarac.
So it is distracting for the rest of the firm, and not having to do deal after deal definitely helps.
Vibhaw Arya:
Being intentional without having that impatient capital wanting to be deployed.
Matt Sonnen:
Yes, exactly.
Vibhaw Arya:
As COO, you own the infrastructure that helps advisors scale and serve clients: operations, technology, reporting, client service, CRM.
How should RIA leaders think about technology?
Is it operational plumbing, growth infrastructure, or a strategic differentiator?
Matt Sonnen:
It's not a strategic differentiator.
I laugh when I see merger announcements where advisors say, "I joined this RIA because of the tech stack."
Really?
I've never heard a client say, "I chose this RIA because of the tech stack."
It's not a differentiator.
But if you're getting the plumbing right, it should fuel growth.
You have to start with who your ideal client is and how you want to serve them.
Then choose your technology.
Too many RIA owners think, "I want the best CRM. I want the best reporting tool."
It's often ego-driven.
Then you ask them how they're using the CRM, and they're basically using it as a glorified electronic Rolodex.
If that's all you're doing, why do you need the most expensive CRM?
You're wasting money, creating complexity, and adding unnecessary burden.
Start with the client and service model, then work backward into technology.
Blake Wood:
Let's talk a little bit about AI.
It has the potential to be transformative across operations, workflows, and client service.
Where do you see the most practical near-term applications, and where has the hype outrun reality?
Matt Sonnen:
We're definitely in hype mode right now.
I question some of the RIAs already claiming advisors are saving 20 hours a week.
What excites me most is the possibility of finally solving the data integration problem.
A lot of my career has been spent trying to get different components of the tech stack to talk to each other.
I've got to get clean custodian data into my reporting system. I've got to get clean planning data into my CRM.
That's been a huge challenge.
What I'm excited about is a future where I can dump all my data into a data lake and layer AI on top of it.
Then I can simply query the data.
I don't have to worry as much about all these systems talking to each other.
Some firms say they're already there. Maybe they are.
Coldstream is not there yet, but that's where I hope we're headed.
Blake Wood:
Maybe we'll pivot to a personal interest question.
Is there a book you're reading or something you're watching that you'd recommend?
Matt Sonnen:
We've done eight mergers over the last five years, and there has been a lot of change at Coldstream.
Our leadership team is working through Switch by Chip and Dan Heath, which is about change management.
One of the analogies in the book is a rider sitting on an elephant traveling down a path.
The rider represents logic. Those are all the logical reasons for change.
But the elephant represents emotion, and the elephant is going wherever it wants.
If you're not speaking to people's emotions, they're going to reject the change.
The path represents the environment.
You want to build an environment where good behavior is easy and bad behavior is difficult.
I love the analogy. It's helping us with change management across the firm.
I'd definitely recommend Switch.
Blake Wood:
Wow. That's great.
All right, we like to wrap up with a speed round. Ready?
Matt Sonnen:
Okay.
Blake Wood:
RIA operations: competitive moat or necessary utility?
Matt Sonnen:
Competitive moat.
We're a service business, and operations are how you deliver service to clients. If you get operations right, that's a differentiator.
Blake Wood:
M&A integration: growth accelerator or culture killer?
Matt Sonnen:
Both.
Get it wrong and it's a culture killer. Get it right and it's a growth accelerator.
Blake Wood:
The tech stack: unified ecosystem or best of breed?
Matt Sonnen:
I'm hoping AI makes that question irrelevant in a few years.
Blake Wood:
AI and advisory operations: real leverage or early hype?
Matt Sonnen:
Today, it's early hype.
I've got the gray hair. I remember 1999, 2000, and 2001.
Back then, if you had a website, investors would throw money at you.
I remember watching the Super Bowl and every commercial was for a dot-com company. Most of those businesses disappeared.
Obviously, the internet changed the world. Amazon and Google are fantastic examples.
But we're not at the Amazon-and-Google stage of AI yet.
Long term, AI will change the world.
Today, we're still in hype mode.
Blake Wood:
Makes sense.
There's a reason Envestnet starts with an E, for electronic investments.
Matt Sonnen:
There you go.
Blake Wood:
Makes it hard for people to understand when they don't know who we are.
Matt Sonnen:
Exactly. In Coldstream's early days, people thought we were Cold Stone Ice Cream.
Blake Wood:
Ice cream, yeah.
All right, last question.
In your view, is the future of the RIA industry institutional scale or boutique specialization?
Matt Sonnen:
I've been saying this for a while: I think the future is barbelled.
The big firms are going to get bigger.
I think the middle is going to struggle.
But if you get serious about your ideal client and build a tight niche, marketing becomes easier and client acquisition becomes more efficient.
There's plenty of room for boutique firms and smaller RIAs.
The big will continue getting bigger, but the middle is going to have a tougher time.
Blake Wood:
Awesome.
Well, Matt, that's all we had for you today. Really appreciate you spending time with Vibhaw and me.
Matt Sonnen:
Thank you.
Blake Wood:
Thank you so much.
And that was Matt Sonnen from Coldstream. This has been Inside WealthTech.
