RIA consolidation on pace for sixth straight record year

Private-equity investors continue to drive M&A activity

Oct 18, 2018 @ 2:47 pm

By Jeff Benjamin

The pace of consolidation among registered investment advisers slowed slightly during the third quarter but remains on track for a sixth consecutive record year.

The latest report from Echelon Partners counted 43 RIA acquisitions during the quarter ending Sept. 30, which is a five-year high for third-quarter activity but down from 48 deals in the second quarter of this year and 46 deals in the first quarter.

This year through September saw 137 deals, compared with 127 over the same period last year.

Echelon is forecasting 46 deals will be completed in the fourth quarter, bringing the full-year total to a record 183, compared with 168 deals for all of 2017.

Average deal size during the third quarter was $1.5 billion, which was 55% above the average deal size for all of 2017 and bodes well for 2018's average deal size exceeding $1.5 billion for the first time, according to the report.

Large, well-capitalized consolidators continue to dominate acquisition activity, representing 53% of all deals during the latest quarter. Consolidators continue to be a driving force behind acquisition activity, along with the growing influence of private-equity investors, according to the report.

An example of this during the third quarter was Genstar Capital's acquisition of Cetera Financial Group's $225 billion in assets under management.

Over the first nine months of the year, consolidators have represented 49% of RIA buyers, an all-time high dating back to 2009.

RIAs so far this year represented just 26% of buyers, an all-time low dating back to 2009.

"This has been an unanticipated development, given the high number of RIAs who are looking to acquire," said Daniel Seivert, Echelon's chief executive. "The erosion of RIAs making acquisitions is likely due to well-capitalized and sophisticated strategic buyers or consolidators aggressively entering the space and winning deals."

Breakaway broker moves totaled 139 during the third quarter, representing a 13% increase from 123 breakaway moves during the previous quarter.

Mr. Seivert attributed the uptick to multiple factors, including an aging adviser population, lots of financing options and the impact of seeing previous breakaways.

0
Comments

What do you think?

View comments

Most watched

INTV

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.

INTV

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

GPB paid B-Ds and reps steep commissions to sell troubled private placements

GPB paid commissions of 9.3%, or $167 million altogether, on the firm's private placements.

Give us a break, active managers say

Seven portfolio managers share their outlooks for the rest of the year, generally agreeing that it's been hard for active managers to stand out.

GPB Capital reports decline in value of two biggest funds

One has dropped by 25.4% and the other by 39%, according to the company.

6 ways Social Security will change in 2020

As the enormous baby boomer generation continues to march toward retirement, they are straining the resources of Social Security. Here are six ways that the nation’s primary retirement income program will change in 2020.

SEC clears up confusion over whether advisers can continue to call themselves fiduciaries

Despite an agency directive to eliminate the word 'fiduciary' in Form CRS, SEC officials say it's OK to use it.

X

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.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print