Envestnet acquisition should ‘embolden’ advisors

investmentnews.com:

Off the heels of last week’s announcement that Envestnet had agreed to be bought by Bain Capital for almost half a billion dollars, several advisors and industry experts are reflecting on what this, and other mega acquisitions, signal for the industry going forward.

Joe Anthony, president at Gregory FCA, said he started in the RIA space over 20 years ago when it was a “cottage industry”, when a large RIA could brag about being a $500 million RIA and feel like they were a big firm.

“Today, obviously, that’s not considered as dominant as it once was but now you have firms that are selling for four and a half, $5 billion, like Envestnet. It just signals to people who are going independent that there’s money out there to be had going independent,” Anthony said.

“This is a real lucrative place and it’s matured.”

While he doesn’t think the acquisition changes anything drastic about the industry or the independent space, Anthony compared the acquisition to “being a bellwether moment” where it might give advisors who are thinking about becoming entrepreneurs the confidence to do so.

“If I’m an advisor, I’m looking at this and saying, ‘I should feel emboldened. There’s still a lot of capital in this space. [If] firms like ours are desirable, I could do well from a career standpoint here.’”

Dann Ryan, managing partner at Sincerus Advisory, said it’s impossible to ignore “all the consolidation in the [wealth management] industry right now.”

“It just shows we’re not ignored anymore,” he said. “It’s easy for a lot of the broker dealers to pretend that they don’t see us but at the same time, wealth management is driving their bottom lines and is incredibly profitable for them.”

However, acquisitions can, depending on their nature and