58.24 %
Charles Schwab riAs ’ PrimAry CUstodiAns
33.90 %
Fidelity how the industry behaves when it has an ownership consisting of both institutional capital as well as private capital owners ,” says Philip Palaveev , the founder and CEO of the Ensemble Practice ( and a Financial Advisor magazine contributor ). He points to the results from this year ’ s RIA survey results suggesting that 42 % of the top 100 firms have institutional ownership . That number would likely be higher if the firms were being more candid , he contends .
According to David DeVoe at DeVoe & Co ., an investment bank and consultant that facilitates mergers and acquisitions , the number of deals has not yet slowed or reflected the market fears . “ Technically in the marketplace , we have not seen a decline . … We have not anecdotally seen any compression in valuation . That said , the arrows in the marketplace are pointing more downward regarding valuation than upward .”
His first quarter report finds midsize and smaller sellers spiked in the first quarter : “ Sellers with less than $ 1 billion in AUM increased to comprise 70 % of all transactions for the first quarter , a significant uptick from 59 % in 2021 ,” the report said .
totAl AUm in 2021 By size rAnge
Size Range
26.78 %
TD Ameritrade
8.80 % Pershing
numbeR Of fiRmS
97.57 %
AUM Fee |
Hourly |
Flat Fee / |
|
|
Retainer |
2021 aum ( billiOnS ) how Firms ChArge For serviCes
28.09 %
45.88 %
2020 aum Of Same fiRmS
10.49 % Other
% change
> $ 1billion |
331 |
$ 3,342.15 |
$ 2,547.40 |
31.20 % |
$ 500 million < $ 1 billion |
88 |
$ 64.12 |
$ 58.77 |
9.12 % |
$ 300 million < $ 500 million |
49 |
$ 19.31 |
$ 15.96 |
20.97 % |
$ 100 million < $ 300 million |
51 |
$ 10.30 |
$ 8.60 |
19.75 % |
$ 50 million < $ 100 million |
7 |
$ 0.56 |
$ 0.45 |
24.81 % |
< $ 50 million |
8 |
$ 0.19 |
$ 0.13 |
44.61 % |
TOTAL AUM |
534 |
3,436.62 |
2,631.30 |
30.61 % |
DeVoe said that consolidators drove most of the M & A activity in the first quarter , picking up 55 % of sellers . The list is dominated by many of the usual suspect acquirers , including Beacon Pointe Advisors , Creative Planning , Mercer Advisors , Mariner Wealth Advisors , Cerity Partners and Wealth Enhancement Group .
Scott Slater , an M & A specialist at Fidelity Institutional and vice president of practice management and consulting , says about the M & A environment this year , “ Through May , we ’ ve seen 93 deals in our reporting , which is up 29 %, largely because you ’ re seeing smaller transaction activity , but even the client AUM is up 12 % to $ 135.2 billion . So it ’ s still up and going .” Fidelity ’ s report found that some of the biggest players are driving activity .
Critics say RIA firms have been able to paper over what is actually slow growth with inflated asset prices and bigger AUM fees . If assets are now declining , firms that aren ’ t growing are going to be exposed — and at a time of higher fixed costs , specifically the cost of employees who have suddenly become very expensive . “ There ’ s been a reprice on talent ,” says Palaveev .
“ We , as I am sure others are as well , are experiencing challenges in hiring talent with the nationwide labor shortage ,” says Marty Bicknell , the CEO of Mariner Wealth Advisors , based in Overland Park , Kan . “ There has definitely been a shift to where it is
what mostly Accounted For your Asset inflows in 2021 ?
New assets from existing clients |
21.91 % |
Assets from new clients |
43.26 % |
Market performance |
32.40 % |
Assets from mergers or acquisitions |
8.61 % |
what mostly Accounted For your Asset outflows in 2021 ?
Assets withdrawn by retired clients |
41.95 % |
Assets lost by clients who died |
10.86 % |
Assets withdrawn by clients for personal use |
29.03 % |
Assets withdrawn by clients who left the firm |
16.85 % |
Advisory Firm ChArACteristiCs caTegORY mean 2021 mean 2020 % change median 2021 median 2020
% change
Number of client relationships |
4,339.45 |
4,047.09 |
7.22 % |
603 |
547 |
10 % |
Firm assets per client * |
$ 6,359,523.10 |
$ 5,914,082.14 |
7.53 % |
1,997,367.13 |
1,754,413.82 |
14 % |
Overall assets per client ** |
$ 1,483,049.86 |
$ 1,217,548.94 |
21.81 % |
NM |
NM |
NM |
* A comparison of assets per client at each ranked firm . ** A ratio of total assets to total clients at all ranked firms . NM = not meaningful .
36 | financial advisor magazine | July / august 2022 www . fa-mag . com