RIA Valuation Insights

A weekly update on issues important to the Investment Management industry

Industry Trends Wealth Management

Wealth Management in Turbulent Times

Navigating the Challenges Ahead

2022 proved to be a challenging year for the stock market as a whole and the RIA industry.  With persistent inflation, rising interest rates, a tight labor market, and heightened geopolitical tensions, it’s no surprise that this resulted in the decline of nearly all stock market sectors over the last year, which was especially true for the RIA industry. But with the prospect of a potential recession in 2023, the worst may still be ahead. 

Industry Trends Transactions

RIA M&A Update

RIA M&A activity set new records in 2022, even as macro headwinds for the industry emerged throughout the year. However, deal volume was most significant in the first half of 2022 and began to cool in the second half of the year, particularly in the fourth quarter. Although transaction volume is still up over the prior year, there has been a decline in the size of these transactions.

Industry Trends

The Eye of the Storm

RIAs Outperform the S&P 500 in Q4 2022

The RIA industry saw a strong fourth quarter rally, driving most categories of publicly traded investment managers to outperform the S&P in the last quarter of the year. Alternative asset managers, however, declined from their early-November peak to perform in line with the S&P during this period. In our blog this week, we take a look at the performance of the RIA industry by sector and AUM in the fourth quarter of 2022.

Industry Trends

‘Twas the Blog Before Christmas…

The 2022 Mercer Capital RIA Holiday Poem

It has become a tradition for the RIA team at Mercer Capital to end the blog year with a “unique” annual summary of industry events, riffing off Clement Clark Moore’s classic “A Visit from St. Nicholas.”  We hope all of you in the investment management community are enjoying the holiday season and looking forward to the many opportunities of the new year.  We look forward to hearing from you in 2023.  For now, please enjoy the finest only holiday poem written about money management.

Industry Trends

Shifting Gears to 2023: Six Trend Changes for RIAs

Don’t Let Your Clutch Slip!

As the RIA team at Mercer Capital looks back on 2022 and ahead to next year, we’ve noticed a few themes emerge in discussions with clients that we expect to hear more about in the new year.  Don’t think of these as predictions but simply the current state of market behavior—the implications of which will soon be evident.

Asset Management Industry Trends

Westwood Looks to Replace Lost AUM and Revenue with Salient Partners Acquisition

Two weeks ago, Westwood Holdings Group completed its acquisition of Salient Partners’ asset management business. The deal is expected to add $4 billion in AUM and $31 million in annual revenue to WHG, pricing the total consideration at 1.5% of AUM and just under 2x revenue. Masking losses through acquisitions is typically a risky proposition, but this may be an instance where it actually makes sense.

Call Reports

Buyer’s Remorse? CI Financial’s M&A Binge

On the earnings call last week, CI Financial reiterated intentions to separate its U.S. wealth management business and Canadian asset management business through an IPO of its U.S. wealth management business. While CI has had apparent success at completing deals, investors have not been on board with the strategy. The firm’s deal pace is slowing, and the focus has shifted to deleveraging and attempting to unlock the value of the U.S. wealth management business built through the planned spinoff.

Current Events Industry Trends

Rough Quarter in a Rough Year

Q3 RIA Performance Was Mostly Bad, But in Lots of Different Ways

Most of the 9/30 quarterly results are in, and public RIA performance was all over the map.  Mostly, it was a rough quarter in a rough year.  Sagging AUM led to revenue cuts which dropped straight to the bottom line.  Some firms mitigated their downside by cutting bonus compensation and marking down earnout payments for acquisitions.  We did a survey of a cross-section of asset and wealth management firms.  Ultimately, it appears some business models are working better than others.

Investment Management

Mercer Capital provides RIAs, trust companies, and investment consultants with corporate valuation, litigation support, transaction advisory, and related services