There are myriad longer-ranging trends facing the advisory/wealth management industry, including a coming avalanche of advisor retirements and fears that there aren’t young people considering the profession to replace those retirees on anything close to a one-for-one basis.
Those are among the issues related to succession planning and with that top-of-mind for many advisors, it probably isn’t surprising to learn industry consolidation has been trending higher over the past several years and that trend is expected to remain in place going forward.
Since 2022, the average annual pace of wealth management mergers and acquisitions has been north of 200 deals, or more than double the yearly pace set in the prior decade, according to Morgan Stanley. It’s possible, if not likely, that the pace will quicken over the next few years.
“The asset and wealth management industry is undergoing a transformative shift, with consolidation emerging as a critical driver of success. The subsector, which historically has been one of the most fragmented in financial services, now faces mounting pressures that are reshaping its landscape,” observes the bank.
Why Wealth Management M&A Will Increase
There are a variety of reasons supporting the case for increased industry consolidation, including margin erosion, intensifying competition for assets and proliferation of technology, including artificial intelligence (AI).
“We expect the combination of these factors to drive M&A in the industry,” said Betsy Graseck, Morgan Stanley’s Global Head of Banks and Diversified Finance Research. “Mid-sized players are becoming attractive acquisition targets for leaders seeking further scale and diversification. ”
Additionally, clients are increasingly sophisticated (and demanding), but growth avenues are difficult to come by for smaller asset managers. Plus, some advisors simply want to retire and the road to retirement, they didn’t develop or want to foster internal succession plans. That’s their prerogative and in that scenario when the principles want to retire, the logical option is a sale.
For buyers and sellers alike, the good news is that unlike smaller asset managers, the growth outlook in the wealth management is more attractive. That implies sellers could fetch compelling premiums and buyers will be rewarded (over the long-term) for paying those multiples.
“Meanwhile, wealth managers seemed to be positioned to benefit from nearly 6% growth in household financial wealth approaching $400 trillion by 2029,” notes Morgan Stanley. “But wealth managers across the industry are struggling with eroding revenue margins, which declined by 6 basis points in 2024 and a further 3 basis points in the first half of 2025 and likely to see continued pressure ahead. ”
Expect These Types of Deals
Prospective buyers and sellers ought to note that wealth management consolidation will likely be carried by three types of deals: intra-sector, inter-sector and those executed by financial sponsors.
Intra-sector is as the phrase implies – a deal between two comparable firms in the same space – while inter-sector would be a transaction aimed at the buyer expanding breadth of services. Consolidation driven by financial sponsors would come about by those buyers looking to enter or bolster their footprints in the asset and wealth management arenas.
“Going forward, we expect inter-sector deals to grab the biggest headlines, with insurance companies and wealth managers reassessing whether they are the right owners of their asset management businesses,” adds Graseck.
