Yield of Dreams

Schwab: Size of RIA Deals Shrinks in Third Quarter

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Mergers and acquisitions activity among registered investment advisor firms in the third quarter was slightly from the second quarter in terms of the number of deals, but the average deal size was much lower, according to Schwab Advisor Services.

There were 10 transactions completed during the quarter with acquired assets under management of $6.1 billion, compared to eight deals last quarter with acquired AUM of $12.3 billion. Jon Beatty, senior vice president of sales and relationship management at Schwab, said there were fewer $1 billion-plus deals during the third quarter.

“We’ve seen an average of 56 deals per year for the last five years,” Beatty said. “Right now we are slightly behind that pace, due in part to the business environment, slow economy, and upcoming presidential election.”

Average deal size for the entire year, however, at $1.2 billion, is on track to outpace last year’s.

Of the 10 deals completed this quarter, seven were done by national acquiring firms, such as HighTower or Focus Financial. Year-to-date, these firms account for 57 percent of RIA transactions, followed by RIA firms at 20 percent, ‘other’ at 17 percent, and regional banks at 9 percent.

“Essentially, many RIA buyers and sellers remain on the sidelines, waiting for more clarity before making a move.”

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