6 M&A stories that have wealth managers watching

April 29, 2022 12:56 PM

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M&A activity can sometimes make perfect, logical sense, while on other occasions a deal can raise more questions than it answers.

From a calculated expansion as “a strategic acquirer” to a $1.4 billion acquisition that surprised no one but left furrowed brows, here are six M&A stories that have the industry watching.

Ian Tuttle

6 lingering questions following UBS’s blockbuster purchase of Wealthfront

UBS’s plan to acquire digital advisor Wealthfront for $1.4 billion was well signaled in advance by both parties, making the January announcement something of a formality.

Wealthfront intimated the previous November that it was seeking buyers, while in an October earnings call UBS CEO Ralph Hamers said, “Organic growth is basically the default. If there is an inorganic option that could accelerate us into that direction, we would certainly consider it.”

However, although Wealthfront CEO David Fortunato said its “philosophy and principles remain the same,” it’s unclear how the new partnership will come to operate in practice.

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Six lingering questions following UBS’s blockbuster purchase of Wealthfront

Business people shaking hands, finishing up a meeting

5 reasons why fintech M&A is hitting new highs

Following a banner year for mergers and acquisitions in the fintech space, with the deals announced totaling $348.5 billion, 2022 is so far showing no sign of a slowdown.

Many fintech companies have matured to a position where the incentives to explore new partnerships makes good sense. “As they want to add additional products or capabilities, they are in the same position as some of the incumbents where it is quicker to go out and buy,” said Sara Elinson, fintech and payments M&A leader at EY Americas.

Here are five deals that highlight the trends behind the current eagerness.

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5 reasons why fintech M&A is hitting new highs

Private Advisor Group buys $1.9B RIA after first ever capital infusion

Private Advisor Group increased its stable of 700 advisors and more than $30 billion in AUM in the acquisition of Investors Financial Group, which added 28 advisors and $1.86 billion in AUM.

While the expansion was funded with outside capital from Merchant Investment Management, the hybrid RIA’s head of advisor growth, Frank Smith, stressed that the expansion was part of the firm’s evolution into becoming “a strategic acquirer” rather than a “serial” one.

Until now, Private Advisor has extended its operations primarily through recruiting and organic growth, but the move for Investors Financial “checked all those boxes” the firm was looking for in a strategic acquisition.

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Private Advisor Group buys $1.9B RIA after first ever capital infusion

Private equity firms acquire LSEG wealthtech for $1.1B

Private equity firms Clearlake Capital Group and Motive Partners are combining forces to make an investment of $1.1 billion in back-office wealthtech with the purchase of BETA+ from the London Stock Exchange.

Comprising three components — BETA, a securities processing engine used to execute trades and send orders; Maxit, a tax reporting software; and Digital Investor, a client-facing holdings dashboard — BETA+ has the potential to be a perfect fit for wealthtech companies in Clearlake and Motive’s portfolio.

“BETA+, together with our other portfolio companies, will be focused on creating frictionless, digital-first experiences for clients, advisors and home office personnel with streamlined processes, reduced costs and increased retention and satisfaction,” Motive co-founder Stephen Daffron said in a statement.

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Private equity firms acquire LSEG wealthtech for $1.1B

Betterment steps into the student loan business with Gradvisor acquisition

Wealthtech company Betterment is adding student loans to its product suite by launching a new student loan management service within Betterment at Work — the firm’s 401(k) business — and by acquiring Gradvisor, a 529 college savings plan provider.

The new service will enable companies to advise on student loan debt and offer employer matching services as an employee benefit, while Gradvisor will allow 529 plans to be offered in Betterment at Work.

By combining student loan management with 401(k) planning, the enhanced Betterment at Work will help people “make decisions about how to pay down debt more effectively alongside saving for retirement,” said General Manager Kristen Carlisle.

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Betterment steps into the student loan business with Gradvisor acquisition

RIAs hook up on M&A advisory in and outside of wealth management

In a sign of a growing trend, two sets of wealth management firms have announced separate joint ventures with a common theme — the addition of M&A advisory to their wealth management services.

Interchange Capital Partners and Defiant Capital Group are forming joint venture Defiant Interchange Advisors to offer M&A advisory to midmarket companies. Meanwhile, Sanctuary Wealth, Concenture Wealth Management and G Squared Private Wealth have formed joint venture 6 Degrees to help partner firms grow through M&A.

John Eubanks, M&A advisory director at Park Sutton Advisors, thinks adding M&A via joint venture makes sense. “It’s hard to find people who have M&A experience to come into a wealth management firm and launch this type of service. It’s harder to accomplish than it actually sounds,” he said.

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RIAs hook up on M&A advisory in and outside of wealth management