By Kenneth Corbin

Mercer Advisors has crossed a significant milestone with the planned announcement of its 100th acquisition today. For good measure, the Denver-based firm is also announcing No. 101.

"We see a very continued pace of M&A," says Mercer CEO Dave Welling. "We've averaged roughly 15 acquisitions a year over the last four or five years, and we think that pace is going to continue."

Mercer's roots date to 1985 when it launched as one of the first fee-only financial planning shops, according to Welling. The firm didn't launch its inorganic growth strategy -- acquisitions -- until 2016. The firm, which says it managed $71 billion in client assets as of the end of March, is majority owned by private-equity backers Oak Hill Capital, Genstar Capital, and Altas Partners.

Latest deals. The two latest acquisitions are Tufton Capital Management, an $810 million firm based in the Baltimore suburb of Hunt Valley, Md., and Lewis Wealth Management, a financial-planning-focused practice in Mercer's home market of Denver with $75 million in client assets.

When Mercer embarked on its acquisition campaign nine years ago, the firm was already large -- it maintained more than 20 field offices in addition to its headquarters (then in Santa Barbara, Calif.) and managed more than $6 billion in assets, having achieved all that growth organically. But Welling, who joined the company in 2017, says the firm decided that it needed to look beyond organic growth if it wanted to accelerate its expansion.

"Opening offices in markets by ourselves just de novo was too hard. It's too steep of a curve and too slow," he says. "We felt like M&A partnerships would be a much better way to go because it brings talent and teams that we simply couldn't recruit or hire away."

Welling describes Mercer's strategy of acquiring and onboarding firms as "integrate not aggregate," referring to the work Mercer does to help the firms address specific goals within their practice, to improve their service model, and ultimately keep growing.

"If you take a pure aggregator, they're really just a holding company," Welling says. "They're holding individual RIAs who are doing things the same way they were before they became a part of the partnership. While that has comfort for some of the sellers, we believe it doesn't add enough value to the clients and the employees who are part of this organization."

For Mercer, integration involves the operational aspect of getting a new practice set up on its systems, but also working out tailored plans to maximize the allocation of talent, provide additional client services such as tax and estate planning, and support its acquisitions with sales and marketing help to boost their own businesses. Welling says Mercer added $900 million in new client assets in April, a figure that excludes any market gains or clients brought in through acquisitions.

Larger suite of services. The expanding service model, particularly in tax planning and preparation, is a key focus for Mercer and figures to drive more of its acquisitions. Mercer has already acquired seven firms with tax practices and now boasts an internal tax planning and prep team of 80. Welling says Mercer is actively looking to expand that line of business and is exploring the acquisition of pure-play tax providers.

The firm is also expanding its internal estate-planning service, its menu of private-market investments for clients of varying wealth levels, and its institutional services for businesses, endowments, and foundations.

Mercer is also eyeing a potential international expansion, likely starting in the United Kingdom or Canada, though Welling notes that such a move would involve a major commitment with a large partner in one of those countries and is likely well down the road.

More imminently, Mercer intends to keep acquiring, just as its competitors in the RIA sector will.

Factors such as an aging advisor workforce and a growing expectation among clients for a higher level of service are likely to keep RIA acquisitions rolling -- snowballing, even. Welling is looking ahead to a "tipping point" where the industry moves from record annual deal counts in the 200s or 300s (depending on whose report you're reading) to closer to 1,000.

Megamerger coming? That consolidation could very well lead to a megamerger among two of the top firms in the industry. "I think it's in some ways inevitable," Welling says. "I think the merger or combination of two larger RIA organizations is highly likely in the next two to three years."

A likely precursor to a deal of that size would be combinations involving an organization of the scale of Mercer snapping up a large but not gigantic firm with assets in the range of perhaps $10 billion to $30 billion, Welling says.

Those firms clearly have a large client base, they may have taken an investment from a strategic backer such as a private-equity shop, and in some cases have already made an acquisition or two of their own. But they still lack the infrastructure that Mercer and its peers have developed in technology, sales and marketing, and in-house services such as tax and estate planning.

"Their dilemma is do they invest in that to keep up with us and some of the others who have [made those investments], or do they join in [and sell to a larger firm]," Welling says. "I think that will happen at the right time."

Is Mercer engaged in those conversations? "Absolutely."

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May 08, 2025 08:11 ET (12:11 GMT)

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