The first quarter was a strong one for merger-and-acquisition activity among registered investment advisors, as deal momentum carried over from a record-setting 2010, according to a unit of The Charles Schwab Corp.

“Clearly, a lot of the same fundamental, structural changes to the industry continue to drive M&A,” says David DeVoe, managing director of strategic business development for Schwab Advisor Services.

Twenty-three deals involving RIAs took place across the industry in the first quarter of 2011, down slightly from the 25 deals reported in the first quarter of 2010. Last year saw 109 such deals, the highest number since Schwab began tracking RIA M&A activity in 2003, and a big jump from the 70 total deals tracked in 2009.

The 23 first-quarter 2011 transactions represent approximately $20 billion in total assets under management. Factors driving the M&A trend include the ageing of RIA principals as well as continued investment from consolidators, some of them backed by private-equity firms, notes DeVoe.

Who is buying RIA firms? Other RIAs, suggest the data from Schwab Advisor Services, which provides custodial, operational and trading support for more than 6,000 independent advisers.

In the first quarter, RIAs were the acquirers 55% of the time. Their level of activity underscores their growing sophistication and reflects efforts to use M&A as a way to achieve business goals and objectives, says DeVoe.

As for the sellers, some of them are using acquisitions as a succession plan, while turn to it as a last-resort exit strategy, he says: “Succession planning is a critical component to any business, and it’s something advisory firms historically haven’t done a phenomenal job of focusing on.”

Consolidators accounted for 18% of the first-quarter deals, and other kinds of acquirers, such as insurance companies and independent broker dealers,  accounted for 23%. Meanwhile, regional banks were the acquirers 5% of the time—and national banks stayed on the sidelines altogether. Banks used to be more active acquirers, but they began slowing down even before the banking crisis, says DeVoe.

“They learned that a lot of the benefits they’d hoped would occur when the bought an RIA didn’t always come to fruition,” he says. “And there was often cultural friction.”

The industry’s troubles chilled M&A activity even more. “They have not come back in a strong way, but time will tell,” says DeVoe.

As for private-equity investors’ interest in RIAs, there aren’t many industries with annual growth in the neighborhood of 20% and profit margins around 25%, notes DeVoe.

The data compiled and analyzed by Schwab Advisor Services Strategic Business Development reflects firms being sold with assets under management exceeding $100 million in 2010.