Fidelity Institutional Wealth Services introduced a platform that it hopes will make mergers and acquisitions easier for registered investments advisors.
The new program, launched Tuesday, will provide counseling and instruction, matchmaking services for RIAs interested in potential M&A opportunities, and discounted financing through a partnership with Live Oak Bank.
There are really three elements, said David Canter, Fidelitys executive vice president and head of practice management and consulting. Its insights and education, number one. Its connections to firms that are looking to buy, sell, or merge. And the ingredient thats really been lacking to date is a bank thats willing to provide access to financing.
The initiative is a response to the broad appetite for acquisitions within the RIA community. Roughly 63% of RIAs would consider acquiring another firm, 38% would consider merging, and 16% would consider selling sometime in the next three years, a 2011 Fidelity RIA benchmarking study found. Yet those results are not reflected in the number of actual M&A deals.
Though there were 13 RIA M&A deals in the first quarter of 2013, according to a Schwab Advisor Services report, the best showing in three quarters, there were only 45 M&A deals in 2012, down from 57 in 2011.
While many RIAs are interested in M&A, the pace of deals has not been commensurate with the interest weve seen from advisors, said Canter. We believe that is largely due to the lack of organizational focus, tools, and third-party support needed to facilitate M&A.
To fill these gaps, on the education side, Fidelity has issued a series of white papers as well as a guide, workbook, and checklist to walk their clients step by step through the M&A process.
To help link up potential M&A matches, Fidelity will host client events featuring M&A-focused networking opportunities and informational workshops. The company will also use its relationship with the independent industry networking website RIA Match, to help clients make connections and contract for the sites services at a discounted rate.
Through its partnership with Live Oak Bank, a small business lender based in Wilmington, N.C., Fidelitys RIA clients will receive specialized service, including access to discounted pricing on loans as well as a an abbreviated loan acceptance process. Live Oak Bank will offer loans of up to $5 million to qualified RIAs and provide loans to finance breakaways as well as internal succession plans.
What weve done is put together a holistic program that provides insights and education, connections to firms that are looking to buy sell or merge, and access to financing, said Canter. We wanted to put all the ingredients we could in place to make it more elegant and easy for advisors that want to do some kind of business combination transaction.