Advisory teams that already have big books are poised to secure the books of retiring advisors, says a new report from Boston-based Cerulli Associates says in a new report.
New research from Cerulli finds that so-called “mega teams”, which it defines as advisory teams with more than US$500 million in assets under management, are best positioned to attract advisors looking to sell their books.
“These teams are most likely to win acquisitions from retiring advisors because, as a buyer, mega teams can maximize earnouts for a seller,” says Kenton Shirk, associate director at Cerulli, in a statement.
“They also have the infrastructure to assume additional client relationships and they are best enabled to provide a seller’s clients with an ongoing positive experience,” Shirk adds. “As broker/dealers and custodians consider the risks of mass retirements and successions, they may need to finance internal acquisitions. In doing so, they are most likely to provide resources to those practices best equipped to handle these transitions. This is yet another factor that could lead to increasing asset control for the industry’s largest advisory teams.”
These so-called mega teams already control a disproportionately large share of the advisory market, according to Cerulli, with 23% of advisors controlling more than half (54%) of industry assets.
See also: Succeeding at Succession