IFA M&A expected to climb – Investec W&I

Added 1st November 2016

M&A activity among small IFA firms is expected to increase over the next two years, according to a survey by Investec Wealth & Investment.

IFA M&A expected to climb – Investec W&I

Of the 94 financial advisers questioned, the majority (55%) said they expect to see a pick-up in consolidation involving smaller advice firms across the industry.  

Over a third (37%) forecast a rise in M&A among larger firms too as the industry continues to consolidate at pace.

The main driver behind this, according to 42% of respondents, is owners looking to sell their businesses in order to retire or semi-retire. 

With almost a third (30%) of advisers planning to sell their business entirely on retirement, the research suggests there will be a steady stream of new firms coming on to the market over the coming years.

The second and third key factors behind the rise in M&A highlighted by the survey’s respondents were the role of technology in creating more efficient business models (34%) and the evolving regulatory landscape (33%).

Advisers said the biggest factor influencing their decision on which firm they would sell to is ensuring they would maintain a high level of client service. This was followed by securing the best financial return and the possibility of remaining involved in their firm on a semi-retired basis.

“M&A in the IFA sector will continue apace over the next few years as advisers belonging to the baby boomer generation will be looking to hang up their boots,” said Mark Stevens, head of intermediary services at Investec Wealth & Investment. “In our experience M&A activity inevitably leads businesses to conduct a thorough review of their business operations and this often results in a decision to outsource the investment management process to a reputable specialist with the expertise and scale required to provide a high quality service to an expanded client book.” 

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Alex Sebastian

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Alex joined Portfolio Adviser in April 2014 and has been a financial journalist since 2008. He has previously held editorial positions at the Financial Times Group and Euromoney Institutional Investor. Alex is NCTJ qualified and has a degree in economics from the University of Sussex.

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