Mark Tibergien, CEO of Pershing Advisor Solutions, foresees a metamorphosis of the RIA industry. He sees more strategic deals being made, accelerating consolidation of RIAs to add scale, not as an exit strategy for RIA business owners.
This Website Is For Financial Professionals Only
RIAs are trying to grow large enough to attract stronger talent to their firms. He sees long term agreements being reached with deals being sought by both buyers and sellers.
The second quarter alone saw eight new transactions totaling $24 billion in assets under management.
The Lee Partners purchase of Edelman Brothers made up $17 billion of that total. RIAs are morphing from largely solo practitioners into super-ensemble firms that can offer clients more as well as higher levels of service.
It’s a trend that started ten years ago. As more RIAs see how these newly conglomerated firms succeed after the deal is done, more mergers and acquisitions will happen. Some may simply form partnerships like the Savant Capital Management and The Monitor Group (now called Savant Capital LLC) did last spring.
Tibergien thinks the structure of the industry could end up looking much like the accounting industry, tiered with a few large firms on top, a rung of smaller regional firms, then multiple partner firms at the next level, and then the solo practitioners.
In a morphing industry, it’s easy to get caught up in the numbers. Tibergien advises keeping the long term in mind when making the deal and taking a logical and systematic approach
He says it’s an investment strategy that should be deliberate. You have to maintain enough of both firms’ culture as you merge. Otherwise, you’ll end up losing your soul for the sake of gaining size and scale.
The beauty of being independent is being able to customize your services to the needs of your client audiences.
As the large financial institutions continue to lose market share, the RIA industry must take care not to venture into a path that will result in a mere second version of them.