Key Takeaways
Trust capabilities can expand an RIA’s role, not just its asset base. Acquiring a trust company can help an RIA serve more complex clients, administer wealth across generations, and remain relevant when decision-makers change.
Trust capabilities may have strategic value beyond stand-alone cash flow. AUM and current earnings still matter, but an RIA buyer may also be underwriting what the capability can do across the broader platform: deepen client relationships, improve retention, support upmarket growth, and avoid the cost and time required to build trust capabilities internally.
The next phase of RIA consolidation is about making scale useful. Platforms that can turn added size into better growth, retention, client service, and strategic capability may be more valuable than firms that simply accumulate AUM.
Most RIA acquisitions are announced with the same script. A buyer adds assets. A seller gains a larger platform. The buyer enters a new market. The client experience improves. There is nothing wrong with that script, but it misses the more interesting part of the story.
The recent acquisition of Smithfield Trust Company by Waverly Advisors is a useful example, but not because of the asset numbers. Smithfield manages approximately $3 billion in assets, while Waverly had approximately $35.5 billion before the transaction. Incremental scale matters, but it is probably not the point. The more interesting fact is that Waverly added a Pennsylvania-chartered trust company and expanded its trust service line.
Trust services are often described as one more offering on the wealth management menu: investments, financial planning, tax planning, estate planning, trust administration. But trust capabilities are harder to add than most service lines because they involve more than advice. A firm with trust capabilities may be responsible for administering trusts, settling estates, managing distributions, coordinating with attorneys and accountants, and carrying out decisions long after the original client is no longer making them.
This changes the firm's role. The RIA is not merely advising on wealth. In some cases, it is helping administer the legal structure that governs the wealth.
This matters because wealth management relationships are not as permanent as they sometimes appear. Clients die or become incapacitated; surviving spouses revisit advisory relationships; children may hire a different advisor; and trustees and beneficiaries may have different expectations than the original client. A long-term client relationship that looks sticky may be less durable when the decision-maker changes.
This is why trust capabilities appeal to RIA platforms. They can help firms serve larger and more complex clients, where trust and estate expertise is often table stakes. They can also help retain relationships that might otherwise drift away when an outside trust provider enters the picture. In some cases, trust structures may improve the odds that the wealth management relationship survives into the next generation.
The easy conclusion is that many large RIAs should want trust capabilities. The harder question is whether the firm should build, buy, or partner to get them. Building trust capabilities is difficult because they are not merely advisory services. They require a regulated fiduciary function, specialized personnel, administration systems, compliance discipline, and capital. The firm also needs people who can make judgment calls in situations where legal, tax, investment, and family dynamics overlap.
This helps explain why trust company M&A is getting attention. A buyer is not just buying revenue or AUM. It is buying a capability that may have taken decades to build. In that sense, acquiring a trust company is different from acquiring another advisory firm. A traditional RIA acquisition may add clients, advisors, or market presence. A trust company may expand what the platform can actually do.
These transactions draw attention partly because there are so few independent trust companies to buy. The trust industry is much smaller than the RIA industry, and attractive acquisition candidates are scarce. But scarcity is only part of the value. Many independent trust companies occupy a useful position in the wealth management ecosystem, serving families directly while also acting as fiduciary partners to RIAs, attorneys, accountants, and other referral sources. That role can be difficult to replicate. When a high-quality trust company comes to market, buyers may be attracted not only to its existing client base, but also to the credibility, relationships, and fiduciary capabilities that have been built around it.
That has valuation implications. AUM and current earnings matter, but they are only part of the story. The buyer may also be underwriting the strategic value of bringing trust capabilities onto a broader wealth management platform. A trust company can help an RIA serve more complex clients, deepen existing relationships, retain assets across generations, and offer capabilities that would be costly and time-consuming to build internally. Existing cash flow is the foundation of value, but the strategic premium comes from what those capabilities can do in the combined business.
This points to a broader shift in RIA consolidation. The first phase was about getting bigger: buying firms, adding advisors, entering markets, and accumulating AUM. The next phase is about making scale matter. Does it improve growth, retention, margins, or risk? If not, the platform may be larger without being much better.
Trust infrastructure is one way scale can become more useful. Trust, tax, estate, and family office capabilities can help a firm serve complex clients without turning every relationship into a one-off project. They give advisors support and clients continuity. Done well, these capabilities make a firm harder to replace. Done poorly, they can simply make the firm more complicated.
For RIA owners, the lesson is not that everyone needs to buy a trust company. Most firms will not. The better question is which capabilities the firm needs to remain relevant to its best clients. If clients are already buying those services elsewhere, the firm should understand what that implies for growth, retention, pricing, and control of the relationship.
The next phase of consolidation may not be won by the firm with the most acquired AUM. It may be won by the firm that can make complex service feel simple. Trust companies are one piece of that race, not the whole race. But they are a reminder that the goal is no longer just to get bigger. The goal is to become more useful.
About Mercer Capital
Mercer Capital’s Investment Management Team provides valuation, transaction, consulting, and litigation support services to asset managers, wealth managers, independent trust companies, broker-dealers, and alternative asset managers.