Mergers & Acquisitions Among
Independent RIAs
FA Insight 2017 Securing Your Firm’s Future survey highlights
March 2017
Signs point to a surge in RIA mergers and acquisitions
 Survey indicates strong advisor M&A appetite to continue for a third year.
 76 percent forecast at least one deal for their firms in the next five years.
 Solo advisors are the #1 M&A target.
 Buying books of business also has strong appeal.
 Bigger RIAs with deeper pockets plan to do more deals.
 However, smaller firms are also planning for more transactions.
 RIAs see M&A helping on many fronts – revenues, assets, expertise & clients.
 Succession planning is a growing concern among those considering deals.
M&A Trends
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M&A Activity Remained High in 2016
Though down from record 2015 levels, deal activity outpaces recent averages
Annual Transactions Announcements
Number of Transactions
90
80
85
77
70
50
51
40
30
20
69
2000-2014 Average =
42 deals / year
60
30
36
30
36
29
50
40
48
48
46
33
38
43
10
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Source: FA Insight, M&A database, 2000-2017
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Pace of M&A Likely to Quicken
​ Interest in M&A engagement soars relative to prior periods
Percentage of Firms Responding
80%
Transaction Experience and Expectations
76%
70%
60%
50%
40%
30%
20%
34%
26%
10%
0%
Experienced a transaction Experienced a transaction
as of 2014
as of 2016
Expecting a future
transaction as of 2016
Source: The 2014 Insight Study of Advisory Firms: Growth by Design; and
Base: Total Respondents (n=234)
Q2: Has your firm been involved with a merger or acquisition in the past five years?
Q15: Is your firm considering at least one transaction in the next five years?
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One Third of Recent Deals Involved Solo RIAs
Industry M&A Activity from 2011-2016
Transactions by Type
Acquired solo advisor with own practice
33%
Acquired firm with multiple advisors
19%
Acquired a book of business only
15%
Merged with another firm
13%
Acquired by some other entity
4%
Acquired by another firm
1%
“Tucked in” a breakaway broker
1%
Other
15%
0%
5%
10%
15%
20%
25%
30%
35%
Percentage of Firms Responding
Q4: Which best describes your most recent transaction? (Select one) (n=80)
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Top target: Solo Advisors
Smaller deals top to-do list of most prospective acquirers
Expected M&A Transaction Type
Acquire solo advisor
61%
Acquire book only
47%
Acquire firm with multiple
advisors
42%
Merge with another firm
36%
Acquisition by another
advisory firm
14%
Join or be acquired by a
consolidator
7%
Acquisition by another type of
entity
7%
Other
14%
Q16: If you are considering a transaction in the near future, which best describes the transaction types that you are considering? (Select all that apply) (n=178)
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RIAs Are Leading the M&A Pack
The financial advisory industry’s most active acquirers since 2008
Acquirer Type by Year
100%
Percent of Acquisitions
80%
10%
25%
12%
34%
12%
26%
10%
25%
9%
15%
35%
40%
22%
23%
26%
30%
28%
2006
2007
40%
42%
2008
2009
26%
18%
18%
50%
6%
24%
22%
60%
20%
20%
15%
17%
21%
19%
9%
14%
21%
22%
12%
21%
14%
51%
52%
2015
2016
16%
62%
42%
39%
2011
2012
44%
0%
RIA
2010
Traditional Aggregator
2013
Bank/Trust
2014
Other
Source: The FA Insight M&A database
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Bigger RIAs Lead the Charge…
… While Smaller RIAs Expect the Biggest Jump in Deal Activity
Transaction Experience and Expectations
120%
100%
Percentage of Firms Responding
100%
91%
80%
69%
68%
60%
Completed M&A
50%
40%
20%
77%
76%
75%
Planning future M&A
32%
14%
0%
<$500K
$500K - $1.5M
$1.5M - $4M
$4M - $8M
$8M+
Firm Size Range by Annual Revenue
Base: Total Respondents (n=234)
Q2: Has your firm been involved with a merger or acquisition in the past five years?
Q15: Is your firm considering at least one transaction in the next five years?
Q23: Which of the following ranges includes your firm’s approximate total gross revenue over the last 12 months?
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Desire for Growth is Key M&A Driver
​ Succession planning likely to drive more deals
Increase revenue growth
45%
37%
34%
Realize economies of scale
Increase asset growth
31%
Provide shareholders with a succession
solution
25%
Expand into new market
17%
Add skilled labor or technical expertise
Access to new service capabilities
Other
46%
30%
24%
24%
Increase client growth
Gain capital for reinvesting into the firm
49%
15%
21%
21%
6%
8%
7%
6%
Plan to Complete a Transaction in the Future
13%
15%
Completed a Transaction
Q6: What were the primary reasons your firm implemented this transaction? (Select up to three) (n=80)
Q18: What are the primary reasons you are considering a future transaction? (Select up to three) (n=178)
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Managing Expectations
Anticipated vs. Actual Benefits of a Recent Merger or Acquisition
58%
Increase revenue growth
33%
Realize economies of scale
69%
45%
45%
44%
Increase asset growth
26%
Provide shareholders with a succession solution
32%
24%
27%
Expand into a new market
Actual Benefit
24%
24%
Increase client growth
Anticipated Benefit
23%
23%
Gain access to new services or expertise
Improve the client experience
11%
18%
8%
7%
Gain capital for reinvesting into the firm
6%
4%
Other
0%
10%
20%
30%
40%
50%
60%
70%
80%
Percentage of Firms Responding
Source: The 2016 FA Insight Study of Advisory Firms: Growth by Design
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Methodology
​ Results are based on an online survey of 234 independent registered
investment advisors (RIAs) conducted by FA Insight and TD Ameritrade
Institutional, a division of TD Ameritrade, Inc., in December 2016. Survey
respondents were clients of TD Ameritrade Institutional and non-clients.
​ All survey respondents have been in operation for at least one year, generating
a minimum of $100,000 in annual gross revenue and serve individuals or
households as primary clients. The margin of error is ± 5.6%.
​ This slide presentation references data from the proprietary FA Insight M&A
database (2000-present) and the 2016 FA Insight Study of Advisory Firms:
Growth By Design to draw conclusions about trends and provide context.
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Important Information
About the Survey
The Securing Your Firm's Future survey was completed in December 2016 through an online survey with the owners /
shareholders of 234 independent RIAs, followed by interviews and focus groups. The median size for RIA firms
represented in the study was $800,000 in annual revenue. The margin of error is +/- 5.6% based on a 90% confidence
interval.
​
About TD Ameritrade Institutional
TD Ameritrade Institutional is a leading provider of comprehensive brokerage and custody services to more than 5,000
fee-based, independent RIAs and their clients. Our advanced technology platform, coupled with personal support from
our dedicated service teams, allows investment advisors to run their practices more efficiently and effectively while
optimizing time with clients. TD Ameritrade Institutional is a division of TD Ameritrade, Inc., a brokerage subsidiary of TD
Ameritrade Holding Corporation.
​
About TD Ameritrade Holding Corporation
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​
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