Fewer RIAs this year are in the mood to sell thanks to stable growth in the markets.

“We certainly can see that advisors are enjoying a period of rapid organic growth and are very inwardly focused,” Jonathan Beatty, senior vice president of sales and relationship management for Schwab Advisor Services, said in an interview. “They are probably thinking maybe I should ride this wave for another year or two before I effect a sale of this firm.”

The first half of 2013 closed with 18 completed transactions, totaling $15.4 billion in assets under management, the lowest on record since the first half of 2008, according to an industry-wide survey of RIA deals completed by Schwab Advisor Services. In contrast, the first half of 2011 ended with 27 deals totaling $20 billion in AUM, while 25 deals totaling $36 billion in AUM were completed during the same time period in 2012, the study found.

The rate of completed transactions slowed in the second quarter of this year with only five completed deals. However, in that same period, average deal size increased from $447 million in AUM in the first quarter to $1.9 billion in the second.


The RIA space continues to be the fastest growing corner of the financial services industry even if merger and acquisition activity is down. Last year RIAs grew twice as fast as wirehouses, according to a new study by the Boston-based research and consulting firm, Aité Group. And this year, RIAs expect the number of their clients to increase by 12%. Wirehouse advisors anticipate 7% growth, Aité found.

Earlier this year, a separate Schwab benchmarking study of 1,000 advisors who custody with Schwab showed a 13% increase in AUM from 2011 to 2012.

All this data “supports the premise … [that] in periods of rapid growth you are less likely to be interested in selling your firm,” Beatty said. “You are more likely to wait for a catalyst to come along.” And many firms may be calculating that the longer they hold off on selling their firm right now, the more it will be ultimately worth, he says.


The slowdown has affected even rapidly growing firms like San Diego-based RIA Washington Wealth Management.

Since it was founded in 2010, the firm has added $1 billion in acquired AUM, almost entirely from former wirehouse advisors. But that total falls short of a prediction made by CEO Robert Bartenstein in 2011 -- that the firm would attract $3 billion in AUM by the end of 2013.

“There’s no question that the first half of this year took a little bit of wind out of our sails,” Bartenstein said last month. “I think, industry-wide, the first half of 2013 wasn’t terribly productive from a recruitment standpoint because many advisors just wanted to enjoy the relative peace and quiet.”


Which doesn’t mean RIAs aren’t interested in the idea of selling at some point.

Among firms managing $100 million to $1 billion in AUM, approximately 25% are actively looking to acquire another firm, Schwab’s benchmarking study found

To facilitate these pairings, each year Schwab holds two to three “Transition On Your Terms” workshops around the country attended by about 200 advisors each, according to Beatty. Schwab also keeps about 100 relationship managers out in the field to foster matchmaking.

“If I work with an advisor who is interested in selling, we might introduce him to an advisor who is interested in buying,” Beatty says.

Schwab doesn’t keep track of how many introductions it makes, nor how many lead to a successful culmination.

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