Wealth management services grow with recession fears; Blackstone expands in London

Private equity-backed Mercer Global Advisors is snatching up wealth managers.

Good morning, dealmakers. MK Flynn here with the Wire.

While Americans are observing Indigenous Peoples’ Day and Columbus Day today, Canadians are celebrating Thanksgiving. I celebrated Autumn this weekend by apple picking in the Hudson Valley with family and friends.

Down to business. Earnings season kicks off this week. “Fasten your seatbelts; it’s going to be a bumpy night,” as Margo Channing said in All About Eve.

Our colleagues at Buyouts will be reporting on how the publicly traded PE firms are doing, and we’ll bring you the news here on the Wire.

Money makers. With a recession looking increasingly likely and the stock markets especially volatile, it’s not surprising that people are turning to professionals for help managing their investments.

Headlines like “How to Make Peace With Your Stock Market Losses” and “So you just checked your 401(k). Here’s how experts say you should navigate the nightmare” set the tone.

As a result, the wealth management business is booming. Consolidation has been underway for several years, and now we’re seeing M&A accelerate in the sector.

One company rapidly snatching up wealth managers is private equity-backed Mercer Global Advisors. Last week, Mercer, which is owned by Oakhill and Genstar, announced two acquisitions: Goldstein Munger & Associates, a San Ramon, California-based wealth management firm with approximately $1 billion in assets under management; and The Asset Advisory Group, a Cincinnati-based wealth management firm with about $370 million in AUM.

Those deals bring Mercer’s 2022 acquisition tally to a whopping 13.

PE Hub’s Obey Martin Manayiti spoke with Mercer chief executive David Barton.

“The Fed rate has depressed equity prices and in a falling equity environment arena, that’s when you need the financial planning advice more than ever,” he said, adding that some people are looking to wealth managers to make up for the losses that the financial market is producing.

Barton expects Mercer to make more deals this year.

“The market is super competitive, and I refer to it as the Walmart effect,” said Barton, referring to the advantage of large size that Mercer has. “It’s very hard for the small registered investment adviser firms to compete with firms like Mercer that are very large.”

As demand grows for financial planning services, there’s intense competition for talent.

“There are not enough quality financial planners and advisers to service all the new clients that are entering the RIA industry in the fiduciary model,” he said.

Customers are moving away from the broker dealer model into the registered investment adviser space. “The growth and the transition of people moving from the BD model to the RIA model has put increasing pressure on human capital,” he said. “We are actually using M&A to cure talent acquisition shortages.”

For more, read the full story.

In London Town. Private equity firms continue to beef up their presence in London. Thoma Bravo recently opened an office in London, and sources tell us others will soon follow suit.

In the meantime, Blackstone announced it had reached an agreement to establish purpose-built, European headquarters in its long-term London home, Berkeley Square, as PE Hub Europe’s Nina Lindholm reports.

The agreement will see Blackstone occupy a 226,000-square-foot, 10-storey building on Berkeley Square. Construction is expected to be completed by 2028.

“It is a source of great pride that Blackstone has been one of the largest foreign investors into the UK since we moved to Berkeley Square over 20 years ago,” said Stephen Schwarzman, chair, CEO and co-founder. “I am delighted to announce our plans to stay on the square and occupy the redeveloped Lansdowne House, providing our people with the platform to continue investing in the industries of the future and building great companies across Europe.”

The New York-based firm has been an investor in Europe for more than two decades.
For more on Blackstone’s presence in Europe, read today’s Dealflow, PE Hub Europe’s daily newsletter.

To receive all the news and insights in private equity-backed dealmaking in Europe, sign up for PE Hub Europe and Dealflow here. 

We’re offering them free for a limited time only.

Dear reader. PE Hub has launched a new reader survey, and we’d love to hear from you. Let us know how we’re doing at the survey here.

As always, you can reach out to me at mk.flynn@peimedia.com.

I’ll be back with more tomorrow.

Happy dealmaking until then,