As can be expected in the current environment, the pace of mergers and acquisitions within the advisory space is down in 2009. That said, interest in M&A deals remains strong as advisors seek ways to strengthen their practices in a challenging marketplace.

According to Schwab Institutional, there were 36 M&A deals among registered investment advisors through June 30, totaling $54 billion in assets. Projected on a full-year basis, that's 72 deals and $108 billion in assets. Last year, there were 88 deals and $137 billion; in 2007, it was 80 deals and $101 billion.

"Clearly, the steep growth trajectory seen from 2005 through 2008 has slowed," said David DeVoe, managing director of strategic business development at Schwab Advisor Services. "But it's not Armageddon, and the bottom hasn't fallen out of the market."

DeVoe cited two reasons for the slowdown. One is stock market declines that lowered asset levels and revenues, as well as cash flows and valuations that go into calculating deals.

The other is the distraction of intensive client care during turbulent times. "M&A is usually something you do after 5 p.m.," DeVoe says. "But principles have been spending countless hours handholding their clients through the downturn."

As a result, he adds, the amount of time it takes to negotiate deals has grown from roughly nine months in past years to about 12 months.

But DeVoe says interest in M&A deals among RIAs has picked up. He noted there were roughly 20 participants during his monthly M&A call in November; in recent months that's grown to about 150 per call.

Among all deals done during the first half, 61% of buyers were RIA firms and 37% were holding companies whose business models are predicated on making acquisitions.

DeVoe says that RIAs are getting more sophisticated in their M&A deals, which include a small but increasing number of management buyouts. He's also seeing more interest in doing deals in order to cut costs and bolster finances in a challenging environment.