Forget the dearth of capital afflicting the rest of the financial industry: RIA firms have access to plenty of money for mergers and acquisitions. Eighteen M&A deals representing $28 billion in total assets under management (AUM) were made in the first quarter of 2009, says a new report from Schwab Advisor Services. Because the first quarter typically accounts for 23% of annual deal volume, that puts the industry on track to complete 78 deals this year, close to the total for 2008, when 82 transactions representing $134 billion in total AUM changed hands, according to Schwab's data.

Investment managers accounted for 60% of the transactions in the roundup, a result of theircreativity in putting deals together, says Dave DeVoe, managing director of strategic development for Schwab Advisor Services. In one case, the management team at Sandhill Partners, of Palo Alto, Calif., bought itself from Boston Private Financial Holdings. Fiduciary Network in Dallas, which buys into fee-only wealth management firms, financed the deal.

Holding companies were the second biggest group of buyers after investment managers, doing 30% of deals. Today, there are at least a dozen holding companies, up from four firms five years ago, DeVoe says. And their various business models offer plenty of choices to principals of RIA firms who want to sell, but not necessarily retire.

RIA principals are selling to diversify their asset bases, and sometimes to create succession plans, DeVoe notes. "If you have $300 million or $400 million in AUM at your firm, it is almost impossible for the next generation to buy it from you," he says. "Selling to a holding company will create the ability for the next generation to buy in."