So much for the second-quarter slowdown.

Last year, RIA mergers and acquisitions fell to a mere five deals in the second quarter of the year, leading the deal trackers at Schwab Advisor Services to speculate that advisors were simply focusing more on clients' taxes than on their own transactions.

But this year? Not so much. The number of transactions jumped to 16 in the second quarter, up from 13 in the first, with the average size of acquired firm assets rising to $1.18 billion from $1.06 billion.

If the pace continues for the rest of the year, both the number and size of 2014 deals would be higher than at any point since 2010.

"This is a very healthy story," says Jon Beatty, senior vice president for sales and relationship management at the Schwab custodial unit, which tracks deals for firms with over $50 million in assets.


After the 2012 surge in acquisitions by the group Schwab labels "strategic acquiring firms" -- HighTower, Focus Financial and the like, who collectively accounted for more than half of all deals two years ago -- the mix of buyers has become more diverse. RIA-to-RIA deals accounted for 31% of transactions in the first half of the year, with aggregators doing 38% of the deals. (International buyers -- primarily from Canada -- have also become more significant players, accounting for 7% of the deals this year, Beatty notes.)

What's still not happening, however, is the widely predicted surge of firm sales, once expected as baby boomer advisors headed toward retirement.


That's a surprise, says Beatty -- but not necessarily an unwelcome one. "The story of consolidation was mostly told through the lens of the need for succession," he explains. "And we see advisors solving for succession via internal means, versus the predicted external means."

Translation: Instead of selling to outsiders, firm founders are hiring talent and aiming for a more gradual handoff.

Indeed, 90% of RIAs in Schwab's annual benchmarking study told the firm this year that they were focused on internal succession.

"Owners have found a means of creating continuity for employees as well as clients, while being able to transition ownership over time," Beatty says. "It's a positive for the RIA profession that there isn't a run for the exits."

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