What’s Got Our Attention?

Industry Trends

This week, we take a break in our musings on asset manager valuations and impractical sports cars to share some recent media on trends in the RIA space we’ve been following.

  • “Defining Value in an RIA: Perspectives of Buyers and Sellers”  by Jonathan Foster, CEO of Angeles Wealth Management  A scalable business model within an aging industry has created a very conducive market for asset manager M&A.  This one-hour live webinar reviews the current landscape for RIA buyers and sellers and suggests strategies for asset managers looking to maximize their value.
  • “Fidelity Predicts Wave of Consolidation among Asset Managers by Robin Wigglesworth of the Financial Times.  Charles Morrison, head of Fidelity’s $2.1tn asset management division, expects a continued surge in sector deal making as industry margins dwindle with fees and rising compensation costs.  Morrison anticipates fewer and larger players when the dust settles in a few years.
  • “Active vs. Passive Debate: Trends, Insights, and Case Studies”  by Eugene Fama.   Dr. Fama and a panel of experts discuss the active versus passive debate that has been plaguing alpha hunters over the last several years.  Despite most active managers’ underperforming the market (before and after fees), many investors still believe in the promise of alpha, but this has become increasingly difficult for stock pickers with fewer and fewer companies going the IPO route.
  • “Cheaper by the Dozen” by Philip Grant of Grant’s Interest Rate Observer. The value-oriented journalist discusses the unintended consequences of a continuous race to the bottom for management fees for passive and active managers alike.  Widespread underperformance and increased scrutiny from institutional investors have created a trend that may not be sustainable in the long run, according to Mr. Grant.
  • “The State of Retail Wealth Management” by McKinsey & Company’s PriceMetrix group.  Even though AUM growth has been healthy at many wealth management firms as of late, a look below the surface shows some disturbing trends: slower growth overall, few new relationships added, and an actual decline in gross production per advisor.  Price competition continues to be a threat, but a greater concern seems to be a lack of penetration into Generation X and Y markets.

Mercer Capital’s RIA Valuation Insights Blog

The RIA Valuation Insights Blog presents a weekly update on issues important to the Asset Management Industry. Follow us on Twitter @RIA_Mercer.