Changes are Happening in the RIA Space
The Greater Rochester marketplace is well represented in the Wealth Management space. Whether it is RIA’s, brokerage firms, banks, financial planners or accounting firms - there are many options for clients looking for professional investment advice.
Recently I moderated a session covering Mergers and Acquisitions in the Registered Investment Advisory space in Boston for the Massachusetts RIA Group. The three members of the panel represent national companies that are very active in acquiring firms and their client assets. It was a very informative discussion on the evolution of our industry and how the advisory landscape is changing. On my drive back I spent a lot of time replaying the conversations from these talented experts and how it has impacted the Rochester market.
Rochester has been at the forefront for M&A activity. Every year the Rochester Business Journal produces its Book of Lists – a ranking of the top local firms in all different industries. Our firm was ranked last year in the Wealth Management category along with 19 of the other biggest firms in town (I have a copy of the list on my desk that I look at frequently which motivates me to continue to excel and remain on this prestigious list). What caught my attention was the amount of firms on this list just in the past 18 months that have been or are in the process of being acquired. Manning & Napier, QCI, Karpus Investment Management and Westminster Consulting with combined assets of over 30 Billion (as of December 31, 2020 per RBJ Book of Lists) are now part of much larger national and international firms. In addition, regional banks and credit unions have also aligned with smaller advisors in town to broaden their products and services.
There has recently been a strong push for these combinations to happen. Part is driven by succession planning but the main reason is private equity money entering this space. PE has funded many companies whose sole purpose is to acquire companies and build AUM. They have jumped into this space being able to pay much higher valuations than traditional players - an attractive metric that many companies just cannot turn down. Time will tell if this aggressive approach will ultimately be rewarding. For the time being, consolidation will continue in our industry as the boutique RIA model will be smaller in size and stature.