Mergers and acquisitions among asset managers and DFM providers could provide some unexpected headaches for Financial Planners in 2022.

Financial Planners have told Financial Planning Today that they are braced for potential provider disruptions as a result of M&A.

Jason Hollands, managing director of corporate affairs, at Tilney Smith & Williamson said that with the current pressure on fees, he expects to see further M&A activity in the asset management market which is still quite fragmented.

He said disruption could be most jarring for advisers using funds with a specialism, such as small caps where any acquisition by a larger manager could leave the fund managers finding it harder to manage money with the same strategy.

Tony Smith, managing director of Elevation Wealth, said he is expecting to see M&A activity among providers with vertically structured operations in 2022.

Elevation Wealth are enhancing their client proposition in order to prepare for any potential disruption from provider M&A, as well as asking extra questions about potential M&A when it comes to doing any due dilligence.

Martin Bamford, Financial Planner at Informed Choice, said M&A among providers is an inevitability and can provide unexpected headaches as it is not something that can be easily predicted.

He said: “Businesses are rightly cagey when it comes to sharing confidential deal information, until that deal is done. We're probably more concerned by providers who have been acquired recently, as they are likely to experience some short-term disruption and poor service levels.”

Mr Bamford said Financial Planners may also see increased interest in acquisition from their discretionary investment managers in 2022.

He said: “Discretionary investment managers are keen to enter the Financial Planning space, to add more value to their existing clients and to help grow their AUM faster. Investment management without a Financial Plan is risky from a regulatory perspective, so acquiring an existing Financial Planning firm is a sensible move.”

Tilney will be keeping a close eye on their favourite fund managers and making sure to stay in close touch to ensure they know what any deals could mean for them.

Mr Hollands said: “Asset management is quite a personal business. M&A can bring disruption and changes for individual fund managers, especially where there are conflicting funds. We will look closely about what deals mean for any funds we support, if the fund managers are happy with the change and will stick around.

“We will look at deals from a product level and individual managers rather than at the brand level.

“The most important question for us is can they maintain the managers we support. We will engage with the managers and the acquirer early in the process to garner any changes there may be.”