More and more private equity firms are getting involved , and thanks to wealth management ’ s recurring and sticky revenue stream , we expect private equity ’ s embrace of the industry to continue .
private equity-backed buyers , according to Fidelity . By last year , that percentage had doubled . Meanwhile , it ’ s not just the number of deals that is notable . More and more private equity firms are getting involved , and thanks to wealth management ’ s recurring and sticky revenue stream , we expect private equity ’ s embrace of the industry to continue .
Aggregators will combine the firms they ’ ve bought . Within the last six months , large aggregators have begun combining firms within their networks to build centralized hubs . Rather than let firms operate in isolation , they ’ d prefer to create the same sort of dynamic buyers hope to create when they make acquisitions in the first place : by creating greater operational efficiency , taking advantage of scale and forging stronger collaboration across the resources of the broader organization . Typically , the largest RIAs within the network form hubs , which are organized according to factors such as geography , culture , service approach and investment philosophy . Focus Financial in particular has been recently pursuing this “ intra-partnership merger ” approach , as have Corient ( the former CI Financial ) and Osaic ( the former Advisor Group ). With the industry trending to more integration , it ’ s reasonable to assume that this emerging trend will become more prevalent across the industry .
Buyers will be adding adjacent businesses via acquisitions . Undeniably , the business of wealth management has become more competitive over the years . At the same time , wealthy and ultrawealthy clients are increasingly demanding more from their financial advisors . In response to these trends , buyers are seeking to add adjacent businesses to round out their service offerings . This can include everything from tax and accounting , investment consulting , outsourced chief investment officer services and trust companies . For example , Mariner Wealth Advisors acquired and merged investment consulting firms AndCo Consulting and Fourth Street Performance Partners earlier this year .
As the major trends continue , we expect 2024 to play out in much the same way , with dealmaking remaining highly active and robust . The wealth management M & A environment is — and will remain — fundamentally healthy .
BOMY M . HAGOPIAN , CFA , co-leads Berkshire Global Advisors ’ Wealth Management practice .
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