The volume of mergers and acquisitions (M&A) among registered investment advisor (RIA) firms may be slowing, but the value of client assets in these transactions has surged, according to the latest report from Fidelity Investments on RIA deal activity.
Fidelity’s report shows 155 RIA transactions through the third quarter of this year, a decline of 11% compared to the same period last year. Despite this dip in deal volume, the transactions represented $541.5 billion in assets, a striking 168% increase from 2023.
Fidelity urges against interpreting the lower deal volume as a "slowdown." Instead, they present it as evidence of a “healthy” market that is normalizing after a period of heightened acquisition activity in recent years. According to the report, the RIA M&A landscape has moved beyond the frenzied pace of 2022 and 2023, with the current environment fostering a more deliberate, sustainable growth trajectory.
Laura Delaney, vice president and senior business consultant at Fidelity Institutional, notes that large aggregators in the industry are recalibrating their approach. These firms are entering a phase she describes as "recapitalization and recalibration," focusing on strengthening their balance sheets and being more strategic in their acquisitions. “It’s not about taking the foot off the gas,” Delaney says. “It’s about making smarter, long-term growth decisions.”
The sharp rise in assets involved in these deals has led to a significant increase in average deal size. In the third quarter, the median deal size reached $515 million in assets, up 51% from the same period in 2023. For the first three quarters of the year, the median deal size has risen by 36%, with a steady increase in transactions involving firms with more than $1 billion in assets, according to Fidelity.
Fidelity’s findings reflect an industry that is both consolidating and evolving. While the marketplace is maturing, it remains highly fragmented, a trend that is expected to continue for decades. Notably, more RIAs are being established each year than are being acquired, underscoring the ongoing growth and dynamism within the sector.
Private equity remains a dominant force in RIA M&A. The proportion of acquisitions backed by private equity has risen significantly, with 78% of RIA deals involving PE firms in 2023, compared to 39% in 2019. This trend shows no signs of abating, according to Delaney.
“There’s no shortage of private equity interest in the wealth management space,” she says. “PE firms see the opportunity to streamline inefficiencies, enhance ROI, and provide the expertise needed to accelerate growth in this maturing industry.”
