Well, I think mergers and acquisitions would be right near the top of the list.
It’s hard to think of another sector that has been such a hotbed of M&A activity.
There were more than 350 deals in the European asset and wealth management sector in 2021, with M&A consolidation activity being "hotter than it has ever been in the past 15 years", demonstrating high levels of activity that show no signs of slowing down, according to White & Case's "Financial institutions M&A: Sector trends" July 2022 report.
Recent deals in the UK space have included Aviva's acquisition of Succession Wealth (March 2022); Raymond Jame's acquisition of Charles Stanley (December 2021); Mattioli Woods' purchase of Maven Capital Partners (July 2021); Tatton Asset Management's acquisition of 50 per cent of 8AM Global (April 2022); and of course the deal that has brought this issue into sharp focus most recently, Rathbones and Investec’s private client arms merging to creating a £100bn UK-based discretionary wealth manager.
Where, in all these victorious articles of M&A triumph and shareholder approval, is the client?
The examples are genuinely too numerous to mention, so much so that we have created the widely accepted term 'consolidators'. I am not sure there is a better word for more accurately describing what we are witnessing and the motivations behind it.
Time and time again we are told about the ever-rising costs of managing regulation, controlling risk, investing in technology, and attracting the best talent. And how, against that backdrop, biggest is always best.
And, as the numbers show, (often with some private equity gunpowder in your back pocket) you have been able to make hay under the relentless sun in recent years.
I cannot deny that the factors mentioned above have had a genuine part to play. In the UK this has been particularly pronounced in the retail space over the past decade from the introduction of the Retail Distribution Review in December 2012, through to the impending implementation of consumer duty and everything in between.
Technology and staying ahead equally carries significant costs if you would like something bespoke, with Brewin Dolphin spending an estimated £55mn integrating the popular back-office platform Avaloq in recent years. And although the scale and the ambition may vary across the sector, they are certainly not alone.
The reality is size brings highly attractive scales of economy.
Then throw into the mix the well-documented race to the bottom on fees, facilitated by model portfolio services.
