More than 200 mergers and acquisitions happen annually in the RIA space. And although the pace of dealmaking varies from firm to firm, that mega-trend shows no signs of cooling.
“M&A activity is a chief pillar of our growth strategy … but we’re not doing it on a conveyor belt,” Suzanne van Staveren, chief financial officer and chief operating officer of Edelman Financial Engines, says in an interview with ThinkAdvisor. “We look for the right cultural alignment.”
Edelman Financial Services and Financial Engines merged in 2018; Viridian Advisors was its first acquisition three years later.
In the past three years, the firm has acquired eight RIAs totaling $5.4 billion, according to van Staveren, a 2024 ThinkAdvisor Luminaries finalist for RIA M&A Executive of the Year.
Edelman has more than 360 financial planners in about 140 offices. Van Staveren highlights three states that the firm has been focused on most recently for mergers and discusses succession planning as a major motivator for smaller firms looking to be acquired.
In the interview with Van Staveren, who previously was with Goldman Sachs and Fidelity Investments, she notes that Edelman’s acquiring RIAs is significant, in part, because with them, the firm can “fill in geographic gaps where [its] clients and prospects live.”
Here are excerpts from our conversation:
THINKADVISOR: How big is M&A activity among RIAs right now?
SUZANNE VAN STAVEREN: Mergers and acquisitions is one of the biggest trends within the RIA industry. Every year, 200-plus deals take place, and $100 billion in AUM changes firms via M&A.
Why has it become so popular?
A lot of the firms have private equity ownerships that are looking for faster organic as well as inorganic growth. It’s part of the private equity model.
There will continue to be more consolidation. Firms are approaching this in different ways. Some are doing rollups. We are not; we like to merge with firms that want to fully integrate with us.
What’s another reason for M&A growth?
Succession planning is a really big part of why smaller RIAs do it: They’ll have a founder who built a really successful firm, and now there’s no one to take it over.
Just what role does M&A play at Edelman Financial Engines?
M&A is a chief pillar of our growth strategy. We’ve done eight M&A transactions in the last three years, totaling $5.4 billion.
Our goal is to complement our organic growth with more M&A in 2025. But unlike other firms, perhaps, we won’t be doing 10 or 15 transactions a year.
We’re a financial planning firm first. So what we look for is the right cultural alignment for us. We take a very personalized approach, which is important. We’re not doing it on a conveyor belt.
And we have a very thoughtful integration process that doesn’t impact our clients.
What are the main pluses for Edelman in acquiring other firms?
We get to add new talent. We get to expand our capabilities, and thirdly, we get to serve more clients and manage more assets with the platform we’ve built.
We have tremendous scale and technology. Acquiring firms allows us to fill in geographic gaps where our clients and prospects live.
What’s a recent deal that you’ve closed?
