The latest update of Fidelity Clearing and Custody Solution’s quarterly merger and acquisition (M&A) report shows the registered investment adviser (RIA) channel continues to see accelerating deal activity.

According to Fidelity, at the end of the third quarter of 2019, M&A activity in the RIA channel had already surpassed the number of transactions and the total assets under management (AUM) the channel saw in all of 2018. Compared to the same period in 2018, the total number of transactions increased 43% (from 72 to 103) and the client assets increased 13% (from $487.8 billion to $551.4 billion).

Echoing other recent reports, such PwC’s review of 2019 M&A activity, Fidelity finds RIAs completing multiple transactions accounted for two-thirds of total activity so far in 2019. The review points to the growing concentration of AUM among the largest firms. The findings bring to mind Hub International’s RIA buying spree in September, when it announced in rapid succession six retirement plan advisory-focused acquisitions. In one week, the firm announced acquisitions of EPIC Retirement Services, StoneStreet, Washington Financial, Perennial Pension & Wealth, Inter-Mountain Retirement Partners (MRP) and WhartonHill.

Beyond Hub’s activity, Cerity Partners this year acquired Blue Prairie Group, and CAPTRUST has been on a buying streak of its own, with a clear focus on merging the retirement and wealth sides of the business.

Overall, 17 RIAs completed multiple deals in 2019, Fidelity says, accounting for 64 deals and 67% of total advisory industry activity. Fewer deals (nine) were announced among independent broker/dealers, but the total AUM transacted was significantly higher.

“M&A in this channel is at a more advanced stage than the RIA channel, as the largest broker/dealers control a high percentage of advisers and AUA,” the Fidelity report explains. “While much of the activity has been scale plays, independent broker/dealers have been launching new platforms and business models to enhance their platform’s attractiveness to leading advisers.”

Fidelity cites the example of LPL Financial buying Allen & Company, an “employee-model broker/dealer,” in order to “broaden its platform and appeal to both brokers and advisers.”

Reflecting on what this picture means for smaller RIA firms with little interest in M&A activity, Scott Slater, vice president, practice management and consulting, Fidelity Clearing and Custody Solutions, has a few pieces of advice. He says firms should take a hard look at the emerging competitors they may face. Perhaps the main factor to consider is whether a small firm’s service model can match, profitably, the client experience that larger, better-resourced firms provide. Also, Slater adds, the deal volume should be kept in proportion. On the one hand, this is a lot of activity, but if one looks at the total number of SEC-registered and state-registered advisory firms out there, it’s something in the ballpark of 17,000 or 18,000, depending on the counting method. Relatively speaking, 30 or 40 transactions per quarter still represents a small fraction of the industry as a whole.