Financial Advisor M&A Rises 30% In 2016

Financial advisor mergers and acquisitions rose 30 percent to a record 641 transactions in 2016 over the previous year, a consultant that tracks the industry said.

That 641 number could “easily reach” 1,000 transactions a year in a few years as financial advisors of all stripes sell their businesses and head off into retirement, said Chip Roame, managing director of Tiburon Strategic Advisors in Tiburon, Calif.

The 641 transactions represent all the deals in four separate advisory segments tracked by Tiburon, he said in a conference call with clients.

Last year, there were 123 transactions in the independent financial advisor segment, 349 transactions in the insurance and third-party administrator segment, 83 transactions among CPAs and law firms, and 86 deals in the real estate agent and mortgage broker segment, Roame said.

“The number of transactions will increase substantially in the independent advisor space,” he said. “I can see it double from 123 over the next couple of years.”

The independent advisor space is made up of registered investment advisors (RIAs) and independent advisor representatives (IARs).

Last year, independent advisors managed an estimated $621.4 billion in assets, an increase of 11 percent over 2015, Roame said.

Independent advisors acquired $62.7 billion in assets in 2016 due to mergers and acquisitions compared with $47.4 billion acquired through mergers and acquisitions in 2015, Tiburon research found.

Fee-based advisors, which are highly profitable, are the “prize possession” for many acquirers now and receive the highest multiples at the time of sale, Roame said. “They are the prettiest girls at the dance right now.”

National Financial Partners, Highland Capital, Clark Consulting and Focus Financial Partners have been among the most active acquirers of financial advisors in recent years, he said.

Tiburon’s financial advisor transaction data, culled from public sources, covers an estimated 80 percent to 90 percent of the financial advisory industry.

InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected].
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