Page 23 - Investment Advisor January/February 2022

Things will “go really well if bear If interest rates go up, private equity On the tech front, he predicted, “over
markets are short-lived, but if we have investments in the RIA space will likely time, technology will continue to evolve
an ’08-’09-type scenario or anything “slow down and there might even be an and enable small, medium- and even
like that, we would see, for the first impact on valuations,” he said, noting large-sized firms to improve the way
time, the collapse of a major player,” they “might compress if interest rates they not only manage their business
he predicted. go up.” but … help them grow more effectively
On the tech front, the Creative Last year, there were just under 200 as well.”
Planning executive said: “Somebody transactions and there are expected to
is eventually going to have to create be 240 this year, he told Investment TIMOTHY WELSH, PRESIDENT, CEO
technology that really goes across trad- Advisor, projecting 240 to 270 in 2022. AND FOUNDER OF NEXUS STRATEGY
ing and reporting and CRM and that’s “We might see some consolidation In 2022, “it’s going to be more of the
really functional.” That is because, “for amongst the consolidators” in same but higher volume in terms
all I hear about how amazing tech- which “some of the firms of M&A, in terms of new
nology in the space is, I find it to be that are in the market- technology coming to
clunky and difficult,” he said. “There’s place sell to some of market [and] new
an incredible opportunity for some- the consolidators me th od olo gi es ”
body to come in and really be transfor- out there [and] including “advisors
mative in this space. But we’re a long some of the con- being able to spin
ways away from it.” solidators sell to up their own tech-
one another,” he nology ecosystem”
DAVID DEVOE, CEO AND FOUNDER said. The major so they don’t have
OF DEVOE & CO. reason for this con- to rely on outside
The “trajectory” for M&A transactions tinued consolidation companies, according
“will probably flatten” in 2022, accord- is “we have an industry to Timothy Welsh, pres-
ing to DeVoe. “We won’t see 50% year- where scale matters and ident, CEO and founder of
over-year growth” in the number of RIA many firms are joining with Nexus Strategy.
transactions next year, but we might see larger organizations to get the benefits New technology will include
more transactions than we saw in 2021, of scale,” he explained. microservices and a “whole new slew of
he said. Meanwhile, we continue to “have a technology software development,” he
“We also have valuations that are at succession problem in the industry,” he said. We also will see people who cre-
extremely high levels and some strong, said. “We don’t have the number of suc- ated big, legacy platforms several years
sophisticated acquiring groups … so the cession plans we need in place, and we ago come back with new tech platforms,
table is set for strong M&A activity” have an aging demographic of he told Investment Advisor.
in 2022, he said. founders and owners.” For example, Oleg Tishkevich, who
Although the “under- He also predicted sold his financial planning software firm
pinnings of mergers that organic RIA sec- Finance Logix to Envestnet in 2015, is
and acquisitions in tor growth is “like- back with a new software development
the space remain the ly to slow down a consulting firm, Invent.us.
same,” DeVoe point- bit [in 2022 from Despite the continued growth of
ed out that “certain 2021].” One rea- RIAs, he predicted the “same flow” of
short-term drivers” son: Finding tal- breakaways from wirehouses because
that led to a surge ent will be “more large firms are doing well and “it’s a
in M&A activity in challenging,” he bull market, so nobody wants to move.”
2021, “like the threat said. Factors include The only thing that “would speed up”
of increased taxes … were the newly mobile breakaways is if there is a “market
short-lived and will not sus- workforce in which break,” he predicted.
tain themselves through 2022.” top talent is no longer con-
But “there might be other drivers that strained by job options in their geo- Staff reporter Jeff Berman can be reached at
come into play,” he conceded. graphic area, he explained. [email protected].

JANUARY/FEBRUARY 2022 INVESTMENT ADVISOR 21