M&A activity

The fragmented nature of the wealth management industry makes it particularly vulnerable to technological change. Indeed, the need to decrease the percentage costs of overheads is driving medium-sized firms across the world to seek mergers with, or acquire, smaller firms.

For smaller firms, the pressure to merge or sell will be hard to resist as they have less capability to handle the scale of business required to achieve a level of efficiency that is profitable in this new environment.

Globally, M&A in the industry increased almost 50% with 124 deals recorded¹ in 2015, although the value of assets transferred in these deals decreased to €366bn from €410bn the previous year. This suggests that rather than the focus being on big-money deals, medium-sized firms are attempting to consolidate their hold in the market by acquiring slightly smaller firms.


The first quarter of 2016 continued the trend of unprecedented levels of M&A activity across the asset and wealth management sector seen during 2015. This has been fuelled by an increasing number of corporates and private equity firms seeking either to grow their existing franchises or establish a foothold in the UK as one of the key global wealth markets.

Growth prospects for the industry also look solid. The heady mix of new pension freedoms, low interest rates, and the continued strength of the property market are tempting many consumers to enter the industry for the first time. Indeed, the private client market is forecast2 to grow at a CAGR of 9.3% to reach £1.1tn by 2019.

A number of key drivers are making the UK market attractive to investors.

Regulation: The continued development of the regulatory environment – such as through increased pensions freedom, the reduction in annual and lifetime allowances and the Financial Advice Market Review – is driving strong growth in the market.

Technology: Advances in technology are driving efficiencies and creating opportunities to better engage with clients. Investors are increasingly looking to build complementary propositions such as robo-advice and D2C (direct to consumer) capabilities.

Fragmentation: A highly fragmented market creates opportunities for building scale. The changes in technology and regulation are driving consolidation among small and medium-sized firms as they look to benefit from economies of scale and improve margins.

Consolidation prospects in the UK market are appealing for private equity investors too, driven by increased costs from an increasingly stringent regulatory environment. In the past, private equity firms have been somewhat notable by their absence from the market, but the Retail Distribution Review – which makes scale essential in the industry – has been a particular driver of PE activity.

Recent PE deals include Synova acquiring financial adviser consolidator Fairstone, and Baird Capital acquiring Bfinance. Bfinance acts as a middleman between large investors and fund managers and has grown on the back of increasing demand for third-party investment advice. Close Brothers Asset Management has been particularly acquisitive, buying Eos Wealth Management and Mackay Stewart & Brown, while a major recent deal saw SVG Capital acquired by US-based HarbourVest Partners for €1.17bn.


The market is worth €466bn according to Inverco, the Spanish Association for Collective Investment. Wealth management services are split between: the large commercial banks such as Caixa, Santander, BBVA and Sabadell; foreign institutions such as Blackrock Investment, JP Morgan AM or Deutsche AM; and smaller banks and independent companies dedicated to private banking.

Andorran banks have also entered the sector, developing onshore banking in Spain. This began with the acquisition of Banco de Madrid by Banca Privada d’Andorra, and was followed by the purchase of Banco de Alcalá by Credit Andorra, and Inversis by AndBank.

Like elsewhere, regulation has substantially increased as a consequence of the introduction of new EU standards. M&A activity is currently low although we expect an increase in the number of transactions as the regulatory environment becomes tougher, with more complex legal requirements.


The market remains dynamic, with a 5% growth rate of assets under management between 2014 and 20153. However, it has reached an important turning point where the major players have to rethink their business models in the wake of continued low interest rates, new regulations and changing consumer preferences.

Young wealth management clients are increasingly important and the average investor is becoming more and more autonomous and less inclined to remain with their historical wealth management advisers.

Market growth and the IT revolution have also attracted numerous new advisers, while a lot of pure players have entered the market such as BforBank and Boursorama. Most of the new regulations are expected to severely restrict the actions of wealth management companies, while the generalisation of automatic exchange of financial account information, adopted by the OECD, is likely to bring important compliance expenses.

The adoption of MIFID II by the European Commission will further lead to important changes, although the market should profit from the effects of the 2015 Macron law which introduces some major innovations to French competition law.


The market is divided between traditional banks and more specialised wealth management companies. Classic assets such as stocks and bonds remain popular, but in the low interest rate climate appetite for more niche assets such as solar, wind and property is rising. A high single digit return in ten years or more, based on fixed energy prices or attractive properties, becomes an appealing investment opportunity.

For the industry these niche assets are a new way of expanding classical wealth management services and it is an area that is less likely to be hit by increasing digitalisation.

Looking ahead we expect to see increasing M&A activity, driven by financial acquirers and strategic investors which can exploit rising regulatory costs and the digital trends that are increasing the complexity of the business model. Financial acquirers will in particular see attractive buy-and-build opportunities in the market.

1 Scorpio Partnership Consultancy
2 Let’s talk payments
3 French Asset Management Association

Recent M&A activity in the wealth management sector:

Date Target Country Description Purchaser Deal Value (€m) Target - Assets under management /Assets under advice (€bn)
Sep 2016 Bouvier Gestion France Investment manager Conseil Plus Gestion (CPG) - -
Jul 2016 Jones Sheridan Financial Consulting Ltd UK Financial advisory for personal and corporate clients Standard Life (1825) - 0.35
Jun 2016 Kleinwort Benson Group UK Private banking and financial advisory Société Générale - 6.7
May 2016 KBI Global Investors Dublin (87.5% stake) Ireland Investment manager Amundi - 7.6
May 2016 AXA Elevate UK Investment platform Standard Life ~65 12.4
Apr 2016 Fairstone (majority stake) UK Independent financial adviser Synova 32 -
Apr 2016 Munro Partnership UK Financial planning and wealth management Standard Life (1825) - 0.6
Apr 2016 Baigrie Davies & Co Ltd UK Financial planning and wealth management Standard Life (1825) - 0.4
Apr 2016 Towry UK Financial planning and wealth management Tilney Bestinvest 750 11.2
Mar 2016 Vestra Wealth (75% stake) UK Investment manager LGT - 7.2
Feb 2016 DFM Adviser Solutions business UK Investment manager Momentum - 0.2
Feb 2016 Ingenious Asset Management UK Investment manager Tilney Bestinvest - 2.3
Jan 2016 True Potential (minority stake) UK Online financial advisory platform FTV - -
Jan 2016 Avidus Scott Lang UK Independent financial adviser Fairstone - 0.4
Dec 2015 BHF Kleinwort Benson Belgium Private banking and financial advisory Oddo & Cie - -
Nov 2015 Karakoram France Investment manager Allegra Finance - -
Sep 2015 Taylor Patterson Group UK Financial planning and wealth management Mattioli Woods 11.4 0.1
Jun 2015 Boyd Coughlan Ltd UK Financial planning and wealth management Mattioli Woods 9.8 -
Apr 2015 Primonial Group France Financial planning and wealth management BlackFin et Latour Capital - -
Apr 2015 Meriten Investment Management Germany Investment manager Oddo & Cie - 24.8
Mar 2015 Ashcourt Rowan UK Financial planning and wealth management Towry 161 7.0
Feb 2015 DNCA Finance (71.2% stake) France Investment manager Natixis Global Asset Management 550 16.5
Feb 2015 Pearson Jones UK Financial planning and wealth management Standard Life (1825) - -