Guest insight: Predictions for Wealth Management M&A Activity in 2025
In the financial services sector, the growth trend is showing no signs of slowing down. According to Carl Woodward, Director at Simplify Consulting, the industry is set to expand in various ways beyond just mergers and acquisitions.
Over the past decade, mergers and acquisitions have been a common occurrence in wealth management. With the UK wealth industry being fragmented, firms are striving to achieve greater scale and enhance their offerings with new skills to meet the changing needs of clients.
Private equity firms have been actively acquiring wealth managers, leading to a wave of consolidation in the sector. Despite economic challenges, the financial services sector has shown incredible resilience.
Pension freedoms have released billions of pounds, prompting buyout firms to invest in wealth firms to seize opportunities presented by an aging population living longer. Additionally, private-equity-backed consolidators are leveraging economies of scale to bring firms together amidst rising operational costs for advisers.
Looking ahead to 2025, we can anticipate more of the same trends. Smaller offerings may struggle to cope with regulatory and administrative burdens and remain competitive due to lower margins. The recent National Insurance increase may not be the sole trigger for further mergers and acquisitions. Instead, evolving business models and the challenges of operating at sub-scale in a complex regulatory environment with squeezed margins are driving consolidation.
Advisers are increasingly exploring alternative platforms to reduce costs and capture more value, especially in light of continued consolidation and acquisition in the industry. With businesses focusing on streamlining operations and improving efficiency, the financial services sector is poised for continued growth in the coming years.
