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Fidelity Announces Deal to Help Custody Clients Finance M&A

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Fidelity Clearing & Custody Solutions has announced a strategic relationship with Merchant Investment Management that will provide Fidelity’s custody clients discounted access to capital for acquisitions.

“Today’s most competitive and future-ready firms are achieving scale through M&A.… But it takes capital to create scale — and with the average deal size increasing three-fold in the past five years, access to that capital can sometimes be a roadblock,” said David Canter, head of the RIA segment at Fidelity Clearing & Custody Solutions. “Lending solutions like this one are a game changer for firms looking to make strategic acquisitions to create long-term, sustainable value.”

In addition to discounted access to capital for RIA firms that custody with Fidelity, Merchant is offering those Fidelity clients reduced rates to several other capabilities offered through its family of companies, including AdvisorAssist, a suite of compliance solutions, and Compass, which provides outsourced CFO and accounting services for advisory firms.

Despite the slightly lower number of deals in the RIA channel last year, the size of transactions grew significantly, creating more competition and consolidation at the upper end of the market, according to Fidelity. Ten of the largest deals among the 88 transactions that Fidelity tracked for 2018 accounted for 59% of total transactions by AUM. By Fidelity’s count, there are over 700 RIAs that manage over $1B which could potentially benefit from easier access to capital for acquisitions.

Fidelity provides more than 13,500 advisor firms with investment and technology solutions and has $7.6 trillion under administration, including $2.7 trillion in managed assets as of April 30.

— Check out Tibergien Talks M&As, Wells Fargo’s RIA Move and Surprising Industry Trends on ThinkAdvisor.