Capitalizing on the Fed's Rate Cut for Growth and M&A

October 29, 2025 — Today, the Federal Reserve lowered the Federal Funds rate by 25 basis points, setting the target range at 3.75%-4.00%. This decision comes amid an ongoing government shutdown and a weakening labor market as the Federal Reserve attempts to mitigate the chances of a hard landing. 

The labor market is showing significant softening. Due to the government shutdown, the September BLS jobs report wasn’t released, but the ADP report showed a private payroll contraction in September 2025.¹ Unemployment came in at 4.3% in August and is forecasted to reach 4.5% by year-end.

The other main factor impacting the Fed’s decision is the resistant inflation rate. The rate remains stable at 3% year-over-year, which the Federal Reserve views as more persistent than fleeting. For insurance agency owners, high costs for medical care, vehicle repair, and shelter inflate claims costs and compel carriers to harden pricing. Simultaneously, lower borrowing costs driven by Fed rate cuts fuel the ongoing consolidation and M&A super cycle in the RIA sector.

The Fed's rate cut signals a move towards neutrality and a strategic window of opportunity. Businesses can capitalize on lower borrowing costs and sectoral changes by focusing on three key initiatives:

1. 1. Pursue Debt Financing Strategically: Take advantage of lower borrowing costs to fund expansion where it makes sense for your business model and growth trajectory.
   2. Invest in Technology and People: Leverage AI and modern systems to enhance efficiency and reduce structural labor costs; simultaneously, invest in upskilling your current workforce.
   3. Acquire to Scale and Solve Talent Gaps: Use M&A to reach new economies of scale and fill open positions, especially in talent-scarce industries.

The current economic climate rewards proactive, well-capitalized firms. The lowered Federal Funds rate has made capital access cheaper and more critical than ever to execute a growth-oriented strategy through M&A for scale and talent or technology adoption for efficiency.

¹ https://tradingeconomics.com/united-states/adp-employment-change 

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