Episode 25, Part 2 - Private Equity, Tech and the Future of Wealth Management
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Hello and welcome to the Growth Workshop Podcast with your hosts, me, Matt Best and Jonny Adams. In this podcast, we'll be sharing insights from our combined 30 plus years experience and hearing from other industry leaders to get their thoughts and perspectives on what growth looks like in modern business. We'll cover all aspects of leadership, sales, account development and customer success, alongside other critical elements required to build an effective growth engine for your business. This podcast is aimed at leaders from exec all the way down to line managers. Welcome back to the Growth Workshop podcast with myself, Matt Best and Johnny Adams, continuing our last episode's discussion. Fascinating insights just shared there in terms of what, and practical things that to Donald's point, if you're listening to this podcast and thinking about selling your business, things you need to consider.
And clearly, um, you know a lot of this stuff we do find out after the fact but due diligence is such an important factor in this to make sure that you're across all of that jitter you mentioned an example of where they got they had two days to do the um the technical integration and they could only possibly have done that had they done enough preparation i think that's a key thing right and a key lesson in this market but in other markets as well um like just to kind of move us into into that second thing from the report which is talking about as a result of some of these shifts that we're seeing What are the key forces driving some of these acquisitions and who are the leading players shaping this?
Donald, we've seen that accountancy-led professional services firms are perhaps looking to rebuild their financial planning capabilities. We've got a renewed PE interest, of course, and then some interest from across the pond in the US as well. So who are those key players and how are those dynamics influencing the future of the market?
Yeah, so there's a lot going on and things are shifting a bit. We actually track the number of deals across the wealth sector. We've got our own way of doing that. We take it from publicly available sources and we've gone back over the last six or seven years to look at the number of deals that are being reported. And it's interesting, over the last five years, there are roughly 150 to 200 deals reported. being announced every year. And that in the main are deals done by PE-backed consolidators or wealth managers. So if you look at 2025, people who are active in that sector are people like Perspective, Shackleton, Clifton Asset Management. Those three have probably accounted for about a third of the deals that have been announced this year.
A lot of those are retiring IFAs, smaller IFA businesses that are being consolidated together. But then we've also got... new PE firms coming into the sector. And there are a couple, Sovereign, Capital, August Equity, they have both acquired this year, Lee Equity Partners. So it's interesting, Shackleton used to be owned by Sovereign. Sovereign then went and acquired another consolidator and Lee Equity Partners came in and acquired a stake in Shackleton. So what we're also seeing is that when PE firms look to sell and they've maybe held their portfolio investment for five, seven years, we're seeing quite a lot of those firms then reinvesting in another firm afterwards. Why they're doing that is because they can see the benefits of investing.
And those benefits, you've got the annuity impact in terms of fees. So there are ongoing fee levels for ongoing financial planning advice, the ongoing fees for investment management. You've got one-off fees. If you then start to consolidate and you execute well, then you can drive out significant cost savings, particularly in terms of some of the larger firms. But also you've got the opportunity to go for what's known as vertical integration, because a lot of those standalone IFA businesses are just providing financial advice. As you bring those together, what some firms are then doing is, well, how can we actually also own the investment solution?
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