After ending 2020 at a fevered pitch, registered investment adviser dealmaking started 2021 with a bang and boom last week, with eight significant deals announced and a total of $159.6 billion in assets changing hands.
Among the buyers and sellers were some of the most significant names in the burgeoning RIA industry.
Chicago-based aggregator Hightower kicked off the action last Monday morning announcing its largest acquisition ever, the purchase of Bel Air Investment Advisors, an $8 billion wealth management firm based in Los Angeles. Also last week, Mercer Global Advisors scooped up two RIAs in Atlanta with a total of $1.6 billion in assets.
But the largest transaction was announced last Tuesday, when Aquiline Capital Partners said it bought a majority stake in Sageview Advisory Group, which has $119 billion in assets under advisement, representing the latest major investment by a private equity firm in a large retirement adviser firm.
[LISTEN: Bob Doll’s 2021 Prediction Special]
That deal was completed before the end of the year, signaling that buyers and sellers wanted to get transactions done before the switch to a Democratic administration and a potential tax hike.
"There were definitely a number of sellers who were motivated to get deals done before the end of 2020, with the potential for the Biden administration to increase capital gains taxes and reduce net proceeds retained by sellers. Dec. 31 was something of a finish line for deals that were in progress for the better part of last year," said Mark Bruno, managing director at Echelon Partners. "It’s important to note that deals don’t come together in a matter of weeks or months, so the change in administration was an accelerator, but obviously not the lone motivator."
Motivation has apparently been abundant among RIA buyers and sellers. Late last Monday, Boston Private Financial Holdings said it was being acquired by SVB Financial Group, creating a $17.7 billion wealth management enterprise.
Last Wednesday, Truist Financial Corp. said it sold its $10 billion 401(k) unit, with OneDigital buying the investment advisory relationships and Empower Retirement and Ascensus taking on portions of the firm’s record-keeping business.
Also last Wednesday, storied East Coast wealth management firm Rockefeller Capital Management said it was expanding its Midwest footprint with the acquisition of Whitnell & Co., a $1.4 billion multifamily office based in Chicago.
Finally, last Thursday, Captrust Financial Advisors said it was adding Phoenix-based MRA Associates, a 59-person firm with $3.3 billion under management.
The flurry of RIA dealmaking activity last week was no surprise, Bruno said.
"Given that most deals take nine to 12 months to execute, if not longer, from beginning to end, we expected to see 2020 end with a larger-than-normal amount of activity," he said.
Bruno pointed to Echelon's research showing that there were 69 transactions in the final quarter of 2020, a new record for a single quarter and a 25% increase over the previous quarter.
"For context, the second half of 2020 was by far the most active period of M&A on record for the wealth management industry," he added.
[InvestmentNews Podcast: Mark Bruno on the big picture of M&A in the RIA space]
Integrated Partners is adding a mother-son tandem to its network in Missouri as Kestra onboards a father-son advisor duo from UBS.
Futures indicate stocks will build on Tuesday's rally.
Cost of living still tops concerns about negative impacts on personal finances
Financial advisors remain vital allies even as DIY investing grows
A trade deal would mean significant cut in tariffs but 'it wont be zero'.
RIAs face rising regulatory pressure in 2025. Forward-looking firms are responding with embedded technology, not more paperwork.
As inheritances are set to reshape client portfolios and next-gen heirs demand digital-first experiences, firms are retooling their wealth tech stacks and succession models in real time.
