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2023 M&A outlook and trends for Wealth Management

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Despite the macroeconomic challenges that have impacted the Professional Services market, rising interest rates and geopolitical uncertainty, M&A activity is expected to rise across the UK Wealth Management sector, in the latter half of 2023.

With the introduction of new operational models, new ways of working and the huge amount of opportunity created through artificial intelligence and machine learning, it’s no surprise that the wealth and asset management sector continues to grow. Research published by Bain & Company, into the evolution of the financial services industry, showed that “there is a $250 billion growth opportunity in wealth management by 2030 and that scale M&A will ultimately play a critical role as the largest players will outpace the market and be able to invest in the digital and analytical capabilities that will offer differentiated services”, (Bain & Company: M&A in Wealth & Asset Management, how deals will shake up the industry).

We spoke to James Salmon, Business Manager for Financial Services, to further explore the top influential factors currently driving M&A activity, and the opportunities it will create for businesses.

"There are a number of positive factors initiating M&A transactions at the moment. Over the short to medium term, we expect larger financially viable businesses to target organisations where they can offer support through digitally-enabled service models, stronger infrastructure, leadership and support capabilities. In turn, these businesses are able to operate more proficiently and cost-effectively, and their clients will inevitably feel the benefit of a truly differentiated service offering.”

James goes on to highlight a number of other trends that he believes will continue to impact the market and influence key decisions.

The UK financial advice market is highly fragmented, with a large number of small firms. We can expect to see more consolidation in the sector, as larger firms look to acquire smaller boutique practices to diversify regional offerings, increasing their market share and efficiency. This trend is likely driven by the increased regulatory burden and the need for economies of scale.

Automation and digital innovations
Technology continues to play an ever-increasing role in the financial services profession, with a growing number of firms employing machine learning capabilities and digital products to automate manual processes, reach new customers and improve efficiency. More and more M&A deals will focus on businesses looking to acquire technology led services and skilled talent to advance their market proposition and stay ahead of the competition.

Increasing demand for financial advice
It’s no surprise that the importance of and demand for, financial planning and advice has increased post the pandemic with customers wanting to protect their assets and future proof their financials and investments. This has led to greater segmentation amongst bigger national players to re-angle distribution, plus an influx in other market sectors.

Private equity-driven M&A
Wealth and asset management continues to attract increased attention from private equity firms as they seek strong sources of return-on-investment. The UK wealth management sector remains attractive partly due to the relatively stable and predictable revenue streams, but also the fairly mature, large and affluent customer bases that are available to purchase; predominantly because of regulatory burden, or those seeking early retirement.

Global insurers, private banks and asset management houses are likely to continue to invest in UK wealth management businesses, to expand presence, build customer bases and offer a wider range of services to customers; ultimately allowing these organisations to increase scale and enhance capabilities. In this current climate of continuous disruption, divestitures can be critical in transforming and reconfiguring a firm, significantly driving business value.

Global M&A activity will likely rise in the second half of 2023 as business leaders and investors look to balance short-term risks with long-term business transformation needs.

If you’re looking for support with your financial services mergers or acquisitions or would just like an informal chat about your options feel free contact James Salmon, Business Manager or Tony Bates, Managing Director.


Bain & Company: M&A in Wealth & Asset Management, how deals will shake up the industry

Morgan Stanley: 2023 M&A Outlook: 4 advisors look trends to watch as deal-making accelerates

Wealth management: Advisors look to 2023 with mixed expectations for 2023

PWC: Asset and wealth management: US deals 2023 outlook