Upward-bound: Tracking M&A deals among RIAs in 3 charts

The value of merger and acquisition transactions among registered investment advisors edged up slightly in 2014, new research shows.

Charles Schwab discloses this finding in a benchmarking report that details RIAs’ asset and revenue growth, sources of new clients, products and pricing, staffing, compensation, marketing, technology and financial performance. Comprising self-reported data from advisory firms that custody their assets with Schwab, the study polled more than 1,100 advisory firms representing nearly three-quarters of a trillion dollars in assets under management (AUM).

The survey pegs the value of mergers and acquisitions among RIA firms in 2014 at $47.4 billion (in AUM acquired), up marginally from the $43.7 billion recorded in 2013. The 2014 figure is down, however, from the $58.8 billion posted in 2012 and the 9-year high of $90.7 billion achieved in 2007.

In terms of the number of M&A transactions, the 2014 result matched that of 2013: 54. The high for the 2006-2014, 70 transactions, was attained in 2010.

“It remains a seller’s market for RIAs and the industry is in a position of strength as firms grow in value and more advisors and acquirers continue to be drawn to the independent model,” says Jonathan Beatty, senior vice president, sales and relationship management, Schwab Advisor Services. “We are seeing more firms being strategic about their growth.

And while many remain focused on M&A as part of that strategy, they are being selective about opportunities and are very mindful of additional factors, such as cultural and philosophical fit, to ensure a merger or acquisition is beneficial and sustainable over the long term for their firm and their clients,” he adds.

The report observes that close to 25 percent of the fastest-growing RIA firms benchmarked in the survey aim to “make opportunistic acquisitions” to secure growth objectives. These firms also report three times more growth than the average firm polled.

See the charts starting on the following page for additional highlights from the report.