RIA Consolidation Numbers Prove Controversial, But Activity Keeps Chugging Along

Thursday, January 26, 2012 10:00
RIA Consolidation Numbers Prove Controversial, But Activity Keeps Chugging Along

Tags: M&A

The 2011 registered investment advisor M&A statistics from Schwab are being interpreted in a lot of different ways, but it's hard to argue that activity is either booming or going over any cliffs.

This Website Is For Financial Professionals Only


In all, RIAs were involved in 57 big deals last year, moving an average of $798 million in AUM apiece.


Last year printed 70 deals and the average transaction that Schwab tracked was bigger, representing an average of $895 million per firm being bought out.


Some say this represents a slowdown in the pace of industry consolidation. Others say it's business as usual.


And since Schwab tinkered with its methodology this time around, year-to-year comparisons may be tricky at best.


Maybe the biggest thing this reveals is that there's still a lot of room for consolidation left throughout the business.


If there are -- as reported -- 1,200 firms that collectively hold 80% of the assets in the channel, they're still getting bought out at a rate of 4% to 5% a year.


And a lot of these giants don't work with retail clients at all. 


Schwab used to track institutional RIAs and hedge funds in their M&A stats. Having them in the mix dramatically distorted the way the numbers reflected the typical retail advisor's world.


For example, in 2010, the old methodology showed 55% more deals and a staggering 147% more AUM in play for an average deal of roughly $1.43 billion.


Does the typical retail RIA that gets bought out have $1.43 billion in AUM? Not really -- and this was never true in the first place. 










Comments (0)

Write comment

You must be logged in to post a comment. Please register if you do not have an account yet.