A recent report by Tiburon Strategic Advisors found that mergers and acquisitions by registered investment advisors slowed quite a bit last year.
The number of M&As deals in the RIA space dropped to 18 as of September, compared with 45 for all of 2012, 57 in 2011 and a high of 70 in 2010.
However, these deals and other advisor-related MA&s should jump in 2014 due to the growing presence of roll-up firms or aggregators of financial advisors, the consulting group suggests. In addition, strategic buyers — namely CPA firms and banks — are expected to jump back into this M&A space, it says.
“Legitimate financial advisor aggregators have finally emerged,” Tiburon experts explain in their latest analysis of advisor M&As, released a weak ago. “Financial advisor aggregators and service providers are emerging to challenge the power and profit margins of the traditional independent financial advisor back-office service providers.”
As of late 2013, there were at least 17 advisor aggregators, compared with fewer than 10 in 2009, the report notes.
Aggregators have completed some 220 cumulative transactions involving about $73 billion in total client assets under management. They account for about 30% of all fee-based financial advisor assets under management, up from 8% in 2003.