“You have to look at the backdrop of what is going on in the industry,” Beatty says. “The RIA professional continues to thrive.” As firm owners and principals age, the majority are focused on internal growth and succession plans that pass the businesses on to younger members of the firm.
“This is great for investors because it provides a continuity of ownership of the firm,” he adds. “While we see healthy consistency in M&A activity in the RIA industry, with strategic acquiring firms continuing to show their buying power, we are not seeing the spike in industry consolidation that many analysts and observers have been predicting,” Beatty explains. “Based on the data in our research, it appears RIAs are indeed in a good position to monetize their firm's value, but they are more often looking to preserve the owner-operator model and maintain their independence through internal succession.”