Bringing you live news and features since 2006 

M&A activity heats up for Independent Broker-Dealers, says Fidelity report

RELATED TOPICS​

Fidelity Clearing & Custody Solutions, the division of Fidelity Investments that provides clearing and custody to broker-dealer firms, registered investment advisors (RIAs), family offices, retirement recordkeepers and banks, today released the latest report in its Fidelity Wealth Management M&A Series; ‘Insights from Independent Broker-Dealers’ (IBDs).

The report found that, year-to-date, USD136 billion in assets changed hands among Independent Broker Dealers (IBDs) as a result of five deals. This compares to the USD80 billion spread across 82 deals among RIAs during the same time period.
 
The report looks at how fewer, but bigger, M&A transactions are altering the future of the IBD channel. According to the report, Large IBD Acquirers – defined as broker-dealer firms with USD10 billion-plus in assets – drove the five IBD deals to-date and are helping to shape the IBD channel into a concentration of a small number of large firms. In fact, the top ten IBD firms in the marketplace now manage 65 per cent of all broker-dealer assets and 48 per cent of all broker-dealer advisors.
 
“There are many emerging multi-billion dollar RIA firms, but they are still far behind the significant scale of the largest independent broker-dealers, which have substantial assets and advisor bases,” says Scott Slater, vice president, practice management and consulting, Fidelity Clearing & Custody Solutions. “So, while we are seeing fewer IBD deals compared to RIA deals, those that are taking place are significant, both in size and in how they are creating innovative business options and platforms for advisors.”
 
According to the report, IBD M&A activity is heating up as a result of major changes taking place in the channel. Costs are rising as broker-dealers make investments in technology, advisor education and oversight to comply with regulations. And, lower advisor productivity is straining bottom lines – average assets per IBD advisor are USD32.9 million, whereas advisors at independent RIAs are twice as productive at USD66.6 million.
 
Drawing upon perspectives of members of the Fidelity M&A Leaders Forum, including extensive interviews with executives at Large IBD Acquirers, the report examines how M&A is providing IBDs an avenue to address these market pressures to increase size, productivity and revenue potential.
 
The report found that two models are emerging in today’s IBD landscape – large firms with scale and focused firms with a distinct value proposition to serve a niche.
 
Post-acquisition, large IBD Acquirers are standardising practices and procedures to improve efficiencies, while also maintaining advisor independence and choice. The report found that the large firms are focused on advisor engagement, management continuity and productivity improvements.

Latest News

Saving and investing app, Moneybox, has doubled the number of ETFs available on the platform, in the light of ‘growing..
Global X ETFs has announced the appointment of Ryan O'Connor as its Chief Executive Officer effective as of April 8, 2024. ..
Value-driven structured credit investing firm, Angel Oak Capital Advisors, LLC, has announced the completed conversions of two of its mutual..
Confidence in the continuing strength of bitcoin and Ethereum is driving wider interest in altcoins and other digital assets, according..

Related Articles

Sal Esposito, Zacks Investment Management
Zacks Investment Management started doing investment research in 1978 and in 1992 started its investment management arm, initially with SMAs...
Jeremy Senderowicz, Vedder Price
Jeremy Senderowicz, a member of the Investment Services Group at law firm Vedder Price, has witnessed a steady upswing in...
Graham MacKenzie, Toronto Stock Exchange
The evolution of ETFs has been a multi-decade experience for Toronto Stock Exchange says Graham MacKenzie, managing director, Exchange Traded...
Frank Koudelka, State Street Global Services
ETF data provider and ETF Express data partner, Trackinsight, has published its Global ETF Survey 2024 Report: ‘50+ Charts on...
Subscribe to the ETF Express newsletter

Subscribe for access to our weekly newsletter, newsletter archive, updates on the site and exclusive email content.

Marketing by