Podcast Center
Video Center
Webcasts
Resource Center
Events
By 
May 14, 2020 at 03:26 PM
M&A activity in the wealth management space is slowing dramatically and shifting the balance between buyers and sellers because of the economic and financial impact of the COVID-19 pandemic.
Fidelity reports just three RIA transactions in April, representing $1.4 billion in client assets, and one broker-dealer acquisition by LPL Financial representing $1.5 billion. This follows three RIA transactions in March totaling $1.2 billion in client assets, the lowest for the first quarter.
When combined, the AUM of the March and April RIA deals ($2.6 billion) was the lowest for any two consecutive months’ worth of deals since Fidelity began tracking RIA M&A activity in 2016.
The four deals in April are below. The first three are RIAs:
- Houston Asset Management Allworth Financial, acquirer $450M AUM
- Coe Financial Services Creative Planning, acquirer $126M AUM
- Willingdon Wealth Management Exencial Wealth Advisors, acquirer $800M AUM
- Lucia Securities LPL Financial $1.5B AUM
“We’re clearly seeing a slowdown in deals announced and closed,” said Scott Slater, vice president of practice management and consulting at Fidelity Clearing & Custody Solutions.
“In reality, there’s plenty of activity before the surface,” said Slater. “People aren’t sitting on the sidelines … But the balance of power has shifted more toward the buyers now. Buyers can and will be more selective in which they’re acquiring.”
Slater expects RIAs with an attractive client base will still be able to attract competing offers and influence the price they receive. Smaller firms with a declining revenue stream and struggling to grow will have a harder time. Slater expects those firms will see downward pressure on multiples but hasn’t seen much of that yet.
Valuation multiples remain 4-6 times earnings for smaller firms with $500 million in AUM and 8-10 times earnings for larger RIAs with $2 to $3 billion in assets, according to Slater.
