RIA sellers might be rushing in ahead of market turmoil

Latest research from DeVoe & Co. shows a first-quarter spike in activity

Apr 23, 2018 @ 5:00 am

By Jeff Benjamin

The first quarter of 2018 saw a record level of consolidation activity in the financial advisory space, according to the latest report from DeVoe & Co.

The 47 registered investment adviser transactions during the first three months of the year represent a 42% increase over the 33 deals completed in the final quarter of last year, according to the investment bank's research.

The busy start to the year followed two quarters described as "weak" by managing partner David DeVoe.

Last year saw 152 deals completed, marking a fourth consecutive year of record highs. But activity slowed in the second half, with just 65 deals completed.

DeVoe separates financial advisory deals into breakaway brokers leaving wirehouses and established RIAs being acquired. The 30 established RIA acquisitions in the first three months of this year set a record for a single quarter. It was double the number of such deals completed in final quarter of last year and eclipsed the previous high of 26 such deals during the second quarter of 2016.

The average assets under management of established RIA sellers during the quarter was $858 million, down from $905 million in the previous quarter.

The number of breakaway brokers joining RIAs during the quarter was in line with historical averages, but the 17 moves was one less than the 18 during final quarter of last year. In 2017, there were a total of 67 breakaway moves.

The average assets under management of breakaways so far this year is $335 million, up 16% from last year's average of $288 million.

In terms of what to expect for the rest of the year, Mr. DeVoe said the recent market volatility would ordinarily be the kind of thing that would dampen M&A activity, but this time could be different.

"Part of the reason deals slow after periods of volatility is that advisers are more focused on client hand-holding, and M&A is something you do after your day job," he said. "But we're nine years into a bull market, and many advisers could be wondering if and when there might be a correction."

The burning memories of the market carnage of 2008, he added, could have some advisers prepping to sell before things get ugly.

"They know if there's a repeat of 2008, valuations will be compressed, potentially creating a two-year window where they will be less likely to sell firm," Mr. DeVoe said.


What do you think?

View comments

Most watched


Young advisers envision a radically different business in five years

Fintech and sustainable investing are two factors being watched closely by some of the 2019 class of InvestmentNews' 40 Under 40.


Young professionals see lots of opportunity to reinvent the advice experience

Members of the 2019 InvestmentNews class of 40 Under 40 have strategies to overcome the challenges of being young in a mature industry.

Latest news & opinion

New Jersey fiduciary rule: Pressure leads to public hearing, comment deadline extension

Industry push results in chance to air grievances on July 17 and another month to present objections.

InvestmentNews' 2019 class of 40 Under 40

Our 40 Under 40 project, now in its sixth year, highlights young talent in the financial advice industry. These individuals illustrate the tremendous potential of those coming up in the profession. These stories will surprise, entertain, educate and inspire.

Galvin to propose fiduciary rule for Massachusetts brokers

The secretary of the commonwealth is proposing a fiduciary standard in response to an SEC investment-advice rule he views as too weak.

Summer reading recommendations from financial advisers

Here are some books that will keep you informed and entertained during summer's downtime

4 strategies for Roth conversions

There's never been a better time to do a Roth conversion, and here are several ways to go about it.


Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.


Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print