The wealth management sector embarked on 2024 with significant momentum in mergers and acquisitions (M&A), showcasing a substantial $32 billion in assets consolidated across 23 deals in January alone, as reported by Fidelity Investments.
This activity underscores a continuing trend of consolidation within the industry, with Registered Investment Advisors (RIAs) leading the charge.
Fidelity's latest M&A report highlights that the RIA segment witnessed 22 transactions involving $31 billion in assets, while the broker-dealer space observed a more subdued activity with a single transaction moving $1 billion in assets from Excel Securities to Arax Investment Partners in Rochester, New York.
The beginning of 2024 marked an increase in the median transaction size to $733 million, up from $588 million in January 2023, indicating a growing scale of deals within the sector.
The report elaborates on the RIA market's dynamic start to the year, noting a slight increase in deal volume and a significant jump in asset movement compared to the previous month. This excludes a noteworthy transaction between Aon and NFP, involving NFP Advisor Services' management of a $75 billion book.
Although there were two fewer transactions compared to the same period last year, the total value of assets acquired saw a 35% increase, with two-thirds of the deals involving assets under $1 billion.
Notably, transactions exceeding $1 billion in value accounted for nearly four-fifths of the total assets acquired in January. Among the prominent deals was Focus Financial Partners' strategic acquisition of $7.3 billion in assets managed by Kovitz Management Team, followed by Focus's inaugural purchase of an alternative investments manager through the merger of Kovitz Investment Management and Origin, a private real estate fund manager. Mariner Wealth Advisors also made headlines with the acquisition of $4.5 billion in assets from Fourth Street Performance Partners.
Strategic acquirers dominated the consolidation landscape, responsible for 73% of the activity, while the month also welcomed new players with four firms making their first foray into the acquisition arena.
The influence of private equity was particularly evident, driving the entirety of consolidation efforts among wealth management firms in the first month of 2024, highlighting its significant role in shaping the industry's future.
