Industry the April 2024 issue

Wealth Advisory M&A Remains Strong

Robust seller’s market provides attractive landing places.
By Phil Trem Posted on April 1, 2024

This was driven primarily by private equity-backed wealth buyers and ongoing interest from insurance brokerages. These acquirers have invested heavily over the past several years, building out platforms and capabilities while establishing M&A teams skilled at identifying, vetting and onboarding quality partners. This has resulted in a robust seller’s market, providing attractive landing places for firms looking to accelerate growth.

2023 M&A Activity

In 2023, there were 275 announced wealth advisory M&A acquisitions in the United States. This represented a 6% decrease from 2022’s record total deal count of 292. (That was the wealth industry’s most active consolidation year on record, driven by demand, an increased number of buyers and easy access to capital.)

Insurance brokerage buyers have remained active in the wealth advisory space, with 33 acquisitions in 2021, 41 in 2022 and 35 in 2023. As a percentage of total deals, insurance brokerage wealth advisory acquisitions increased from 6% of activity in 2020 to almost 13% in 2023.

There has also been an evolution in recent years in the types of acquisition targets sought by insurance brokerages. Historically, insurance brokerages focused on retirement planning businesses. But MarshBerry has noted a continued expansion of insurance brokerages into wealth advisory, as firms strive to meet their clients’ business and personal needs while also diversifying and strengthening their revenue streams. Of those 35 wealth-sector transactions that insurance brokerages completed in 2023, 71% (25 deals) were for firms that offered wealth advisory services, up from 66% (27 deals) in 2022.

Interest in the wealth advisory space has grown in recent years due to a convergence of factors. As the average wealth business owner is over age 55 and many lack viable internal perpetuation options, there is a large pool of assets under management (AUM) that need a new home. Insurance firms are attracted to the wealth space by the shared characteristics of industry stability, the trusted advisor-client relationship, low client turnover, and recurring revenue.

2023 Most Active Buyers of Wealth-Sector Firms

Hub International added eight firms to its base: two retirement and wealth advisory providers, three retirement planning companies, and three wealth advisory firms.
OneDigital made six acquisitions: two retirement and wealth advisory firms, one wealth company, and three retirement planning firms.

NFP continued to accelerate into the space by closing six deals covering three wealth firms, two retirement planning and wealth firms, and one retirement planning firm.

Other noteworthy dealmakers were Accession Risk Management Group and MAI Capital Management (EPIC Insurance Brokerages), each with three closed deals, and Alera Group sealing two deals.

Notable Transactions

Jan. 4: Alera Group acquired The Ascent Group, a national wealth, retirement plan services, and insurance firm with $1.5 billion in AUM and $1.3 billion in retirement assets.

June 22: OneDigital expanded its presence in wealth management with the acquisition of StoneStreet Equity, a retirement plan consulting and wealth management firm in Armonk, New York, with over $3.8 billion in assets under advisement.

Looking Ahead

In 2024, economic conditions are expected to improve with possible interest rate cuts, which should provide favorable borrowing costs for acquirers. Coupled with an election year with possible tax change implications, we could see an uptick in M&A activity. However, continued inflation and other macroeconomic risks may present challenges, so only time will tell.

In the short term, a positive economic outlook could encourage an increase in acquisition activity and the number of deals per buyer, as well as attract new buyers to the wealth space.

Phil Trem President of Financial Advisory, MarshBerry Read More

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