Financial Planners have told Financial Planning Today that they expect a rise in wealth management and financial advice M&A deals this year.

The Financial Planning market has already seen several deals since the start of the new year.

Deals included IFA Prosperis acquiring Yorkshire-based Financial Planning AJ Hird, recently founded Financial Planning firm One Four Nine Group acquiring Surrey-based Chartered Financial Planning firm Total Wealth Planning, and Financial Planning consolidator Elevation Financial Group acquiring Essex-based IFA Innovate Financial Solutions.

High valuations, retiring advisers and increasing cost/regulatory burdens on smaller firms will drive an increase in M&A activity this year, Financial Planners have predicted.

One Four Nine told Financial Planning Today that they expect around 15% of advisers to consider selling their business within the next five years. They are expecting 2022 to be a very busy market for Financial Planning firms looking to be acquired.

One Four Nine expects to make further acquisitions this year and are in discussions with several firms. They are particularly interested in financial advice firms owned by professional service firms, as well as adviser businesses who offer tax efficient alternative investments as part of their offering.

Martin Bamford, Financial Planner at Informed Choice, said that while valuations remain high we are likely to see large numbers of advisers looking to sell their business.

He said: “Valuations for quality Financial Planning businesses are reasonably high right now, and there is no guarantee that multiples of recurring revenue or EBITDA will continue to increase, so 2022 could be a sweet spot for achieving the best possible price for your business.

Tony Smith, group managing director at acquisititve Elevation Wealth Management, said he expects there to be particularly high demand for M&A among 1 to 3 director Financial Planning firms this year, especially where they do not have robust succession plans in place.

He said: “Assuming that we are reaching a door that will take us on to the new normal, then there will be a latent demand from firms that have put up the bridge during the last 2 years .

“Owners have had time to ‘stand and stare’ and now understand that they are 2 years older and 2 years have been lost in preparation for retirement – they appreciate more that things do happen , appreciate mortality more and generally are more attuned to doing something about it.

“So given this back drop I expect record demand for M&A activity.”

Elevation Wealth Management’s sister company Elevation Group, of which Mr Smith is also managing director, is a consolidator of advice firms which are then merged into the wealth management firm.

Elevation Group did four deals in 2021 and is gearing up to do around three more this year. The firm currently has two deals at the stage of agreeing heads of terms.

Mr Smith noted that increased demand for Financial Planning firms is leading to a price increase for firms.

One Financial Planning firm which has been very acquisitive in recent times is Tilney Smith & Williamson.

The latest deal saw Tilney add Essex IFA FP Solutions to its Chelmsford office in January under its succession programme which targets retiring financial advisers who want to transfer their client books.

Jason Hollands, managing director of corporate affairs, at Tilney said the rising average age of advice firm owners means that many are now looking at succession planning and how they can make sure their clients are left in good hands when they retire.

He added that increasing costs and the need to adopt new technology are making it harder for smaller firms advice to operate, including those owned by younger advisers or with succession plans in place.

He said: “Technology adoption has been accelerated by the pandemic with clients now expecting a lot more in terms of the technology experience from their adviser. Based off the acquisition conversations we are having with advisers, many are now realising it makes sense for them to be part of a larger organisation.”