The number of M&A deals involving UK financial advisers and wealth managers has risen 11% to a record high of 440, according to data from international law firm Mayer Brown.
The data, which looks at the year ending 30 September, shows there were 398 UK advice and wealth deals in 2021/22.
Prior to this, there were 426 deals in 2020/21, 341 in 2019/20 and 342 in 2018/19.
The trend for M&A deals for IFAs is being driven in large part by private equity-backed consolidators. These firms have been very active in acquiring smaller IFAs over recent years as they seek to build large businesses in the sector.
Another key driver of consolidation is the increasing compliance requirements of the sector. Many smaller firms do not have the management time or other resources to easily achieve compliance regulations.
Frequent targets for M&A deals include older IFAs looking to exit their firms to fund their retirement. Recent data published by the Financial Conduct Authority (FCA) showed that 17% of financial advisers are over 60, suggesting that there are still likely to be many more potential acquisition targets for consolidators.
James West, partner at Mayer Brown, said: “Given the fragmentation of the sector, IFAs were ripe for consolidation. This has been going on for a number of years and shows no sign of slowing down yet.
“Signals still point to even further consolidation in the year ahead. There are still a large number of advisers contemplating selling their firms to fund retirement. The increasing regulatory burden and the difficulties of scaling a small IFA firm will make selling to a consolidator an attractive exit option for some of them.
“Given the greater resources and improved technology which IFA platforms can bring, the trend towards greater consolidation can be seen as a positive for the sector overall including, most importantly, the customers of these IFAs.”
