After several years of new highs in the number of mergers and acquisitions involving registered investment advisers, Rudy Adolf, founder and CEO of Focus Financial Partners Inc., sees no abatement in deal-making.
“The overall pipeline could not be stronger," Adolf said on a conference call with analysts Thursday to discuss the company's third-quarter earnings. "We are very pleased with the quality, diversity, both domestic and international. We are probably working on more deals than I can ever remember."
Anxiety about potentially higher taxes under the Biden administration is less of a factor driving deals than overall aging of advisers, Adolf said in response to a question about taxes.
"Taxes may or may not have some implications here in the U.S., and no implications internationally, but always keep in mind the fundamental driver of industry consolidation, the fundamental driver of our acquisition business is really the aging of the founders [of RIAs] and the founding generation,” he said.
"There are 50,000 advisers just in the U.S. who are 65 or older and managing $3 trillion in client assets," Adolf said. "These forces are so much stronger than taxes here or there. There's no question that our momentum next year and years after is going to continue to be very, very strong.”
RIA aggregators like Focus Financial Partners have seen an explosion in growth over the past decade, fueled in large part by private equity managers seeking the stable 25% to 35% returns of well-managed wealth management firms.
Focus Financial Partners reported that it closed two partner firm acquisitions and seven mergers during the third quarter, bringing its year-to-date total of closed transactions to 16.
The company breaks its deals into three categories. Partner firms are acquisitions and under the roof of Focus Financial, while mergers are deals completed by the Focus partner firm satellites. It also recently added Connectus Wealth Advisers, which acquires RIA firms both outside and inside the United States.
For the three months ending in September, the company reported total revenues of $454.5 million, 37.1% year-over-year growth, and net income of $1.85 million, compared to $3.9 million for the same period last year.
Its share price hit a new 52-week high of $66.10 in trading Thursday morning.
While industry statistics pointing to a succession crisis can cause alarm, advisor-owners should be free to consider a middle path between staying solo and catching the surging wave of M&A.
New joint research by T. Rowe Price, MIT, and Stanford University finds more diverse asset allocations among older participants.
With its asset pipeline bursting past $13 billion, Farther is looking to build more momentum with three new managing directors.
A Department of Labor proposal to scrap a regulatory provision under ERISA could create uncertainty for fiduciaries, the trade association argues.
"We continue to feel confident about our ability to capture 90%," LPL CEO Rich Steinmeier told analysts during the firm's 2nd quarter earnings call.
Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.
Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.
