While various sectors of the U.S. economy are facing consolidation pressures, the registered investment adviser (RIA) and independent broker/dealer industries are in the eye of the merger and acquisition (M&A) storm.
According to Fidelity’s year-end 2019 Wealth Management M&A Transaction Report, the pressure for financial services firms to scale and the pervasiveness of prepared buyers who hold significant capital in a low interest rate environment continues to fuel record transaction activity.
As predicted, 2019 proved to be a record year for both RIAs and independent broker/dealers (IBDs) in terms of M&A activity. According to Fidelity, across the RIA and IBD channels, there were 139 transactions representing $781.1 billion, with transactions up 43% and assets transacted up 38% compared to full year 2018.
Additional findings from Fidelity’s latest quarterly M&A report show there were 127 RIA transactions (up 44% year-over-year, totaling $151.3 billion (up 38% year-over-year). There were 12 IBD deals (up 33%) totaling $629.9 billion (up 38%).
Underscoring the aggressive activities of serial and strategic acquirers, 54% of RIA transactions were completed by the 10 most active firms, accounting for 68 deals in total.
“After a year of steady acceleration in M&A activity, 2019 came to a close with record numbers in both total deals and AUM transacted,” says Scott Slater, M&A specialist and a vice president of practice management and consulting for Fidelity Clearing and Custody Solutions. “Looking ahead to 2020, we expect the same driving forces—external capital, growing operating costs, the search for talent and the need for scale—to pave the way for another year of strong activity.”