2021 RIA M&A Action Continues at Record Pace

Fidelity has published its latest registered investment adviser (RIA) merger and acquisition (M&A) update, finding RIA M&A activity continues to accelerate as 2021 comes to a close.

According to Fidelity, RIA deals during the month of November totaled $42 billion in assets under management (AUM), and year-to-date, there have been 182 RIA transactions, totaling $304 billion. These figures are up 61% and 78%, respectively, compared to the year-to-date figure for November 2020.

As Fidelity’s analysis shows, large deals are driving much of the activity, with 75 deals registering more than $1 billion in AUM so far in 2021. This is nearly double the number of deals of this size or greater reached in all of 2020.

Nearly every month in 2021 has seen several highly recognizable industry names join the ranks of sellers, with November being no exception. Some of the big-ticket deals from the month include CI Financial acquiring Gofen and Glossberg and Bluestein, and Cerity Partners purchasing Bingham, Osborn & Scarborough. One such deal that is of particular significant in the retirement planning arena was NFP’s Wealthspire acquiring Private Ocean. Notably, several buyers closed multiple deals in November, including four deals completed by Focus Financial firms, two by CI Financial and two by Allworth Financial. 

Nationwide’s recent update of its Advisor Authority study tells a similar tale, finding RIAs and financial professionals in the wirehouse and broker/dealer (B/D) channels have grown even more bullish about current and future M&A activity. Simply put, more advisers and financial professionals are looking to monetize their practices in the years ahead, with some looking to make their practices stronger through strategic and/or serial acquisitions. Overall, about two-thirds of financial professionals polled by Nationwide expect consolidation and M&A activity in the industry to increase in the next 12 months.

Notably, the Nationwide survey shows more respondents expect M&A to have a positive impact on their practices—54% in 2021 compared with 42% in 2020.

“Our study makes it crystal clear that RIAs and financial professionals in the wirehouse and broker/dealer channels are more bullish about M&A than we’ve seen in years,” says Craig Hawley, head of Nationwide annuity distribution. “Valuations are rising as markets hit new highs and private equity gets in on the game, meaning some advisers and financial professionals are more than ready to monetize their practice.”

According to the study, roughly three-fourths of RIAs and fee-based financial professionals (73%), nearly three-fourths of wirehouse financial professionals (74%) and roughly two-thirds of B/D financial professionals (65%) say that consolidation and M&A in their industry will increase. Expectations for deal flow are substantially higher than last year, up 14 percentage points (73% vs. 59%) for RIAs and fee-based financial professionals, up 9 percentage points (74% vs. 65%) for wirehouse financial professionals and up 5 percentage points (65% vs. 60%) for broker/dealer financial professionals.