Broker-Dealers Adopt RIA Consolidation Strategy to Boost Valuations
Broker-dealers are increasingly adopting a consolidation playbook for Registered Investment Advisors (RIAs) to capture market growth and enhance firm valuations. A prominent example is Cetera Financial Group, which recently merged its Avantax Planning Partners and The Retirement Planning Group units into Cetera Planning Partners. This new entity manages nearly $19 billion in assets and operates under an employee-advisor model, aiming to provide stability and infrastructure. Since 2020, Cetera has completed approximately 70 transactions to expand its RIA footprint. Industry consultant David DeVoe notes that independent broker-dealers (IBDs) like LPL Financial, Osaic, and Raymond James are similarly acquiring RIA firms to bolster low profit margins and compete with national consolidators. LPL Financial, for instance, has spent nearly $900 million on 77 acquisitions. Despite this trend, DeVoe highlights a lingering stigma among some fee-only advisors regarding joining IBDs due to perceived conflicts with transaction-based models. Nevertheless, the strategic shift reflects a broader industry move where IBDs leverage their massive affiliated RIA assets to drive incremental growth and offer integrated technology and operational support to advisors.
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Broker-Dealers Adopt RIA Consolidation Strategy to Boost Valuations
Broker-dealers are increasingly adopting a consolidation playbook for Registered Investment Advisors (RIAs) to capture market growth and enhance firm valuations. A prominent example is Cetera Financial Group, which recently merged its Avantax Planning Partners and The Retirement Planning Group units into Cetera Planning Partners. This new entity manages nearly $19 billion in assets and operates under an employee-advisor model, aiming to provide stability and infrastructure. Since 2020, Cetera has completed approximately 70 transactions to expand its RIA footprint. Industry consultant David DeVoe notes that independent broker-dealers (IBDs) like LPL Financial, Osaic, and Raymond James are similarly acquiring RIA firms to bolster low profit margins and compete with national consolidators. LPL Financial, for instance, has spent nearly $900 million on 77 acquisitions. Despite this trend, DeVoe highlights a lingering stigma among some fee-only advisors regarding joining IBDs due to perceived conflicts with transaction-based models. Nevertheless, the strategic shift reflects a broader industry move where IBDs leverage their massive affiliated RIA assets to drive incremental growth and offer integrated technology and operational support to advisors.
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