It was another record-breaking year for mergers and acquisitions among registered investment advisor firms, with at least 205 deals for the entire year versus 203 deals in 2019, marking an all-time high for the eighth consecutive year, according to a report by ECHELON Partners.
But that was not all. The transactions represented a shift in the buyers’ landscape this year. There were several new players entering the wealth management industry, private equity firms ramped up purchases through direct and secondary investments, and the industry’s high profitability and steady cashflows are increasingly attracting new entrants and resulting in increased competition and higher valuations, Echelon noted.
The year also turned in a record increase in average assets under management per deal over 2019, according to ECHELON's fourth-quarter RIA mergers and acquisitions report. The average AUM acquired per transaction grew to more than $1.8 billion, a 24% increase over last year’s average of $1.5 billion, the highest annual average to date.
The following is a list of the top 10 M&A transactions, based on AUM from lowest to highest. As noted by Echelon, the list illustrates three key trends: minority investments by private equity, retirement plan asset consolidation and Wall Street banks buying main street investors.
10. Dyal Capital Partners/Iconiq Capital
Last month, New York private equity firm Dyal Capital Partners acquired a minority stake in San Francisco.-based Iconiq Capital, an investment firm that manages wealth for the ultra-wealthy with $39.6 billion in AUM.
9. OneDigital/Resources Investment Advisors
OneDigital, a national health-care and insurance benefits provider, acquired Resources Investment Advisors LLC (Resources), an advisory network headquartered in Overland Park, Kan., in February. Resources provides advice to 2,600 employer-sponsored retirement plans and a total of $45 billion in assets under management.
8. GTCR/CAPTRUST Advisors
Chicago-based private equity firm GTCR acquired a minority stake in Raleigh, N.C.-based CAPTRUST in June. CAPTRUST, which has more than 700 employees and 43 offices in 21 states, has more than $400 billion in assets under advisement (AUA), including more than $45 billion in managed assets for private clients and institutional investors.
7. General Atlantic/Creative Planning
Private equity firm General Atlantic made a strategic minority investment in Creative Planning in February. Overland Park, Kan.-based Creative Planning, which has $50 billion in AUM, has 27 offices, 650 employees, and clients in all 50 states.
6. Goldman Sachs Asset Management, Neuberger Berman, Coller Capital, Thomas H. Lee/Hightower Advisors
Goldman Sachs Asset Management, Neuberger Berman and Coller Capital collectively invested about $800 million in Hightower in October, alongside Thomas H. Lee. The Chicago-based Hightower manages roughly $61.6 billion in client assets.
5. LPL Financial/Waddel & Reed Financial
At the beginning of the month, the nation’s largest independent broker-dealer, LPL Financial, acquired Waddell & Reed’s brokerage business from Macquarie Asset Management for $300 million. LPL gained 900 advisors and $63 billion in assets under administration.
4. CC Capital, Motive Partners/Wilshire Associates
Private Equity firms CC Capital and Motive Partners acquired Santa Monica, Calif.-based Wilshire Associates, a global financial services firm. The deal added $73 billion in AUM.
3. DiMeo Schneider & Associates/NFP/Fiduciary Investment Advisors
DiMeo Schneider & Associates/NFP, a New York City-based insurance broker and consultant, acquired Fiduciary Investment Advisors LLC (FIA), a Windsor-Conn.-based independent investment consulting in January in a deal that created a unified firm with seven office locations, managing $200 billion in client assets in 47 states nationwide. Dimeo Schneider added $167,000 in AUM.
2. Empower Retirement/MassMutual
In September, Empower Retirement acquired the retirement plan business of Massachusetts Mutual Life Insurance Company, a move that increased Empower’s participant base to more than 12.2 million and retirement services recordkeeping assets to about $834 billion administered in about 67,000 workplace savings plans. Empower added $167 billion in AUM.
1. Morgan Stanley/E*TRADE
Morgan Stanley bought E*Trade for $13 billion in February. The all-stock takeover added E*Trade’s $360 billion of client assets to Morgan Stanley’s $2.7 trillion. Morgan Stanley also received E*Trade’s direct-to-consumer and digital capabilities to complement its full-service, advisory-focused brokerage.
