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RIAs Hop, Skip, and Jump Across America with M&A

By Crucial Clips     April 24, 2019
The following text is a transcript of a portion of a speaker's presentation made at an industry conference or during an interview. This transcript solely represents the view of the individual who spoke, and not the view of Financial Advisor IQ or any other group.
Source: FAIQ, Apr. 18, 2019 

GARRETT KEYES, REPORTER, FINANCIAL ADVISOR IQ: There’s been more RIA M&A over the last few years than ever before. 2017 saw 147 transactions, according to DeVoe & Company analysts. About 20% more deals happened last year. And while geographical expansion has always been one use of M&A, experts say that trend has significantly increased.

One firm to recently use this strategy is United Capital Financial Advisors. This month they bought smaller RIAs in Atlanta and the Quad Cities region of Iowa and Illinois to continue building their national presence.

And they aren’t alone. Firm after firm has been in the news saying they’re using M&A to enter new markets.

Scott Slater also says it’s a recent trend he’s noticed.


Absolutely, I think that’s one of the key strategies. There really are two options when you go into a new market and want to expand into new markets. You can do it with ’genovo’ start-up and bring your own staff and move them to that location, have them start up an office and begin to bring clients, maybe there are some clients that kind of ancillary are there. Or you can purchase a firm that already has a strong presence, has all the networks there, particularly with centers of influence and connections and some level of branding. And it’s a much faster way to establish a footprint and a more economical way in any case. So there are quite a few firms that are looking and that’s a way to expand their businesses.

Mercer Advisors is a good example of a firm using M&A to grow its national presence.

The firm has completed 18 acquisitions since 2017.

Dave Barton, its vice chairman and M&A leader, says in all those cases Mercer was looking for locations that build on its existing presence, or offer ways to enter new markets. “It’s always to go deeper or get there.”

Entering markets through M&A is sometimes the only way to enter some markets where you can’t just open up a new office under your own brand. Portland, for example, “is for locals only,” he says. “If a firm comes in and plants a flag, you look like a carpetbagger,” he says.

Barton isn’t alone in thinking this way.

JIM BAKA, PRESIDENT, CALAMOS WEALTH MANAGEMENT: So you want to first off have some advisors that have existing client relationships. So if you are starting brand new and you have no client relationships, it’s very difficult to enter any market and think that you’re going to be successful. At the same time, you want to have somebody that understands the local market. So if you are relocating to a new market and you really don’t understand the local market it’s going to be very difficult. But at the same time, having a team, not having just a single individual, but having a team that’s already had some experience in working together, with clients and in client relationships, is extremely important too. Everybody wants to be a part of a team, nobody wants to be the sole person within a respective marketplace ... so it provides for a team orientation, camaraderie among other people on the team, but it also allows you to leverage some of the skill sets and capabilities of other people on your team as you are addressing the needs of your clients.

This M&A trend looks set to continue …


I think everybody is waiting for, or anticipating, that they are expecting a big influx of even more aggressive M&A. And everything is well-positioned for exactly that right now because there is plenty of capital, there’s some very well-organized and well-prepared acquirers, and there are plenty of available potential sellers and it’s a matter of bringing those kind of ingredients all together that I think increasingly, I think, you’re going to start and see more activity happening.

And with M&A set to accelerate, RIAs should be on the lookout for competitors acquiring their way across America. I’m Garrett Keyes for Financial Advisor IQ.