M&A Activity Peaked in 2010
There were 109 merger-and-acquisition deals involving RIAs in 2010, according to Schwab Advisor Services. The total number of deals made last year the busiest year for M&A transactions since Schwab started tracking activity in 2003. Small firms ruled, as 58% of deals represented less than $500 million in assets under management, according to the custodian's report on industry-wide RIA mergers and acquisitions. But that doesn't mean consolidation among small firms will change the makeup of the industry, according to Dave DeVoe, managing director of strategic development at Schwab. New firms entering the industry and advisors starting their own firms offset the consolidation. Transactions in 2010 represented about $156 billion in total assets under management, compared with about $103 billion in 2009. On average, the 2010 transaction size was $1.4 billion, compared with $1.5 billion in 2009.
Advisors in Touch
Finantix, which provides wealth management and sales applications to financial services firms, won the "Best of Show" award for its Wealth Apps for the iPad. The news came at the Finovate 2011 industry event in London in January. Wealth Apps allows advisors to interact with clients more effectively, according to Alessandro Tonchia, founder and director of Finantix, who developed the tool. It lets advisors present services and products, discover and discuss client needs and simulate different hypotheses and solutions. Finantix has been offering a suite of iPad apps since May 2010. Now in their second iteration, the functions support the full spectrum of client-advisor interaction and aim to reduce advisors' dependence on paper and unwieldy laptops.
The number of people aged 65 and older will increase by about 79% between now and 2030, according to the U.S. Census. That could mean as many as 75 million new financial planning clients, about the number of boomers retiring, according to a February survey by the Retirement Income Industry Association. Advisors who are not focused on boomers will be missing out. More than 70% of advisors who specialized in boomers enjoyed significant growth in client revenue since 2008, according to the survey. And because the industry is so fragmented, advisors don't have to adhere to one single philosophy to serve that group, according to Howard Schneider, founder of the financial services and consulting and research firm Practical Perspectives. Advisors can differentiate themselves and grow their practices. More than 1,000 financial advisors, executives and industry observers responded to the survey.
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