M&A activity among RIAs stalled in this year’s first half, as more advisors sought internal rather than external growth.

Recent data from Schwab Advisor Services shows that, industrywide, mergers and acquisition activity among RIA firms during this year’s first half dropped to its lowest level since the first half of 2008.

According to Schwab, there were 18 completed M&A deals totaling $15.4 billion in assets under management during this year’s first half. Of these, just five were done in the second quarter. At the current pace, 2013 is on track for the lowest level of M&A activity—in both the number of deals done and the firms’ assets under management—since Schwab started tracking the RIA mergers space in 2006. In addition, the average deal size of $859 million in this year’s first half is well below the average deal size since 2006.

Jon Beatty, head of sales and relationship management at Schwab Advisor Services, says most advisors are enjoying a period of rapid organic growth and are inwardly focused. “Many in the industry believe M&A is a good vehicle for growing a firm, but when advisors can make hay through organic growth, they want to focus on that,” he says.

While the pace of M&A action has slowed, the largest percentage of deals made in the first half (50%) were RIAs buying other RIAs. “These are deals done by like-minded RIAs coming together to gain scale or to get access to new markets or to acquire new capabilities,” Beatty says.

The number of RIA deals made by strategic acquiring firms has slowed during the past year. And banks continued to be non-players in this arena.

Beatty doesn’t read too much into the first-half numbers, noting that 2008 saw a total of 54 deals even though there were just 17 deals done during that year’s first half. “I like to look at the five-year average, which is about 52 deals per year,” he says. “We’re now projecting to come in below that in 2013.”

But that could change, he says, noting that Schwab’s 2013 study found that roughly 25% of firms with $100 million to $1 billion in assets under management are actively looking to acquire another firm.