This can happen over the next decade. Some of course argue that the numbers are inflated because they do not factor in advisers “dying with their boots” on.
Cerulli Associates research says that the aging financial adviser demographic is expected to put $ 1.6 trillion worth of client assets in play, over the next five to ten years.
This consulting firm based at Boston counts $2.4 trillion in client assets, as the total addressable market for potential registered investment adviser acquisitions, over the next ten years. It cites the lack of succession planning as the driving force behind the bulk of this activity.
Marina Shtyrkov, a research analyst at Cerulli Associates said that the Succession Planning resources are decentralized in the independent channel. It meant that the largest, well capitalized RIAs are best positioned to match advisers to a likeminded successor and help navigate the process to provide capital to fund the transition.
The research made by Cerulli shows that over 80% of the advisers that are currently affiliated with an RIA consolidator, view it as a strategy for succession.
David DeVoe, Managing Director of DeVoe and Company, a firm that tracks data that shows M&A activity in the RIA space hitting new records every quarter, said that the economics for internal succession was improving but the industry now desperately needed first generation advisers to start putting succession plans in place.
Mr. DeVoe further added that Cerulli was spot on with their thesis and the data provided by them seemed directionally accurate.
But not everyone, in an industry where the average practitioner is 58 years old and about only 30% have established formal business succession plans, sees an emergency in placing a plan for succession in the horizon.