The number of RIA firms is exploding. According to Investment News, five years ago there were just 28 firms with over $5 billion AUM; now there are 52, an 86% increase.
Organic growth is playing a role, but M&A is an even larger contributor to this trend, the Investment News analysis notes. Many are looking to create economies of scale, and buff up tech capabilities as well, both of which are easier to do by acquiring existing firms rather than on your own.
The M&A boom is fueled in large part by the years-long bull market; but we all know bull markets don’t last forever. We’ll see if this trend continues, and what it means for smaller family-owned shops going forward.