Mergers and acquisitions of registered investment firms held at a steady pace in 2014, with 54 transactions, the same number reported in 2013, according to Schwab Advisory Services.
Assets of last year's sales totaled $47.4 billion, up from $43.6 billion in 2013. The average sized of last year's deals was 9 percent higher than in 2013.
"It remains a seller's market for RIAs, and the industry is in a position of strength as firms grow in value and more advisors and acquirers continue to be drawn to the independent model," said Jonathan Beatty, senior vice president of sales and relationship management for Schwab Advisor Services.
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While more firms look to grow through acquisitions, Beatty said purchasing entities are being more selective, as "cultural and philosophical" considerations are made to ensure deals are sustainable for both the firms' and clients' needs.
While the steady level of acquisitions is indicative of strength in the independent advisory model, Schwab's study of the trend, which is drawn from a survey of RIAs with assets under custody with Schwab, suggests the volume of deals industry-wide is less than some have predicted.
"While many firms seek merger or acquisition opportunities as a means of growth, we haven't seen the spike in consolidation that industry observers have predicted," said Beatty.
In another study, more than half of the RIAs that use TD Ameritrade as custodian reported they were looking to make at least one acquisition. Succession planning was cited as the primary reason behind the movement.
Schwab's study showed that in 2014, 25 percent of the fastest-growing practices were looking to grow by acquisition.
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Nick Thornton
Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.
