The number of mergers and acquisitions of financial advisors is set to increase substantially in 2014 and beyond, according to research released by Tiburon Strategic Advisors.

“Financial advisors are aging -- specifically independent advisors, who were traditionally younger than employee advisors,” says Tiburon managing partner Chip Roame. “The number of new advisors is limited, so the ability to buy these books is valuable specifically as tuck-ins to larger firms.”

One of the larger firms that simply saw the trend before everyone else, says Roame, is National Financial Partners. The big IBD has been scooping up advisors for a total of 153 advisor acquisitions over the last dozen or so years. Behind NFP are more recently founded Focus Financial Partners, with 23 acquisitions, and HighTower Advisors with 21. (Update: HighTower says that, including tuck-in deals, it has actually made 41 acquisitions.)

Tiburon's research, released late last week, predicts that these new financial advisor aggregators are likely to succeed, despite a drop in dealmaking last year. “The trend is going to pick up further and faster,” says Roame.

Tiburon notes that roll-up firms actually dropped in 2013 from the leading type of advisor buyer, making just 39% of the acquisitions -- down from 53% of the purchases in 2012. Instead, other RIAs actually accounted for 50% of the buyers this year, up from 22% in 2012.

Tiburon also predicts that so-called strategic buyers, such as CPA firms and banks, will increase their M&A activity with financial advisors -- and that independent broker-dealers and custodians will continue to treat the succession challenge as a crisis or an opportunity (or perhaps both).

“It takes years to appropriately plan for a succession,” says Roame. “Firms that think through succession planning also run themselves better in the interim.”

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