“There are simply not enough new advisers coming in,” said Marina Shtyrkov, an associate director at consulting firm Cerulli Associates. “That’s causing a sense of urgency.”
‘Fell Swoop’
The growing shortfall has changed how financial-advisory firms think about growth, experts said. Rather than trying to hire advisers from a limited pool of new recruits, many are finding it easier to simply buy existing firms and make the advisers their own.
Doing so presents “an opportunity to increase the number of financial advisers in one fell swoop,” said Devin Ryan, who analyzes the wealth-management industry at JMP Securities.
Some firms have embarked on full-fledged buying sprees.
Canadian wealth manager CI Financial Corp. has bought about 20 advisory firms since entering the U.S. market last year, tripling its wealth-management assets to $128.5 billion in the 12 months ended June 30, according to company filings. Its latest acquisition was San Francisco-based Portola Partners, which specializes in advising ultra-high-net-worth technology founders, executives and venture capitalists.
Since July, Mariner Wealth Advisors has made five other acquisitions in addition to the Channel Islands deal, adding $7 billion in assets under management, the Overland Park, Kansas-based firm said Thursday in a statement. Rockefeller Capital Management, the New York-based firm run by former Morgan Stanley executive Greg Fleming, has acquired at least nine adviser teams this year, including those in Denver, Cincinnati and San Antonio.
A big driver of deals, advisers say, is the so-called succession crisis spreading through the industry.
The owners of independent advisers and their rank-and-file employees are growing older, leaving a limited pool of potential successors. The soaring valuations of their firms during the Covid era offer a prime opportunity to sell while leaving the business in stable hands.
“The average age of an adviser is 51,” Cerulli Associates’s Shtyrkov said. “The pandemic was a wake-up call for them. They started to ask themselves, ‘How long do I want to keep doing this?’”
—With assistance from Max Reyes.
This article was provided by Bloomberg News.