Top M&A And Recruiting Predictions For 2023

Julius Buchanan, Managing Editor, Wealth Solutions Report

Interest Rates Challenge RIAs And Strengthen IBDs, Equity Offers Increase, M&A And Recruiting Converge, Aggregators Of Aggregators On The Horizon

With 2022 in the rear-view mirror, small and large firms alike continue to analyze their options and positions for potential recruiting moves and M&A this year. 

We reached out to industry experts to explore what’s in store for recruiting and M&A in 2023. Lou Camacho, President of Stratos Wealth Enterprises and COO of Stratos Wealth Holdings, sees advisor recruitment and M&A increasing in 2023. 

Lou Camacho, President, Stratos Wealth Enterprises and COO, Stratos Wealth Holdings

According to Camacho, “A challenging market environment in 2022, rising inflation and overall economic uncertainty seem to be driving sellers to reduce risk by seeking a liquidity event. These factors present an incredible opportunity for buyers and sellers in 2023.”

Kristen Kimmell, EVP, Business Development at Advisor Group, says that advisors have focused intensely on guiding clients through the pandemic and market volatility in the recent past, and will now reflect more “on their own needs, looking to ensure that they are partnered with the best firm to support them and their practice for the long term.” 

Kristen Kimmell, EVP, Business Developent, Advisor Group

PE-Backed RIAs Challenged, While Cash Sweeps Power IBDs

A significant change going into 2023 is the interest rate headwind facing private equity-backed RIAs that serves as a tailwind to IBDs.

David DeVoe, Founder & CEO of DeVoe & Company, points out that many factors influence a buyer, “but the combination of a declining stock market and increasing interest rates is particularly challenging for PE-backed consolidators.”

According to Alex Goss, Co-Founder, Co-CEO and Managing Partner of NewEdge Advisors, this challenge to PE-backed firms actually operates in reverse for IBDs, as it “presents a unique opportunity for independent broker-dealers flush with passive income generated by their cash sweep programs.”

David DeVoe, Founder & CEO, DeVoe & Company

Goss says that his firm has already seen IBDs fueled with additional funds from cash sweeps enter the M&A space.

Kimmell agrees that higher rates allow some cash sweep programs to fund reinvestment and adds, “Having a stronger balance sheet allows firms like ours to be more opportunistic in the marketplace and provides us greater resources to support the broadest array of business models.”

Increased Equity Component To Offers

Another trend gaining traction into the new year is an increase in the equity portion of compensation, replacing the five-year forgivable cash loan model. 

Alex Goss, Co-Founder, Co-CEO & Managing Partner, NewEdge Advisors

According to Camacho, “Not only are more buyers offering equity, but sellers are also seeking equity as a portion of the deal consideration.”

Goss sees the equity trend in RIAs, but not IBDs: “RIAs are often able to leverage their equity as a more attractive consideration based on the premise of a higher future liquidity event versus all-cash deals. While IBDs will start competing in the M&A space, they will predominantly do so with cash only.”

Camacho warns sellers to exercise caution when seeking equity compensation. “High levels of debt and already inflated multiples could limit the upside potential of the equity. We often suggest that buyers maintain some portion of their own equity and participate in the long-term growth potential of the partnership.”

Goss says that regardless of impact on advisors, the equity versus cash balance in an offer should not impact clients, but cautions advisors to “focus on moves that first benefit the overall client experience over the amount a firm is willing to pay. The highest upfront check doesn’t always translate into the best client experience.”

Convergence Of M&A And Recruiting

“With the significant consolidation across the industry, we see recruiting and M&A naturally converging,” says Kimmell. She points out that advisors and firms are seeking the benefits of scale. 

“Additionally, with the increasing number of financial advisors looking to retire, who may not have a successor in place, we are seeing opportunities for M&A consideration of these practices.”

Camacho believes this convergence has already begun and predicts the winners: “Hybrid RIAs and large OSJs will benefit from this trend as wirehouse teams and registered reps seek a landing spot for brokerage and advisory assets.”

Aggregators Of Aggregators

Taking note of the multiyear trend toward aggregation in the industry, experts expect RIA aggregators to reach new levels this year.

“It is a matter of time before ‘consolidators start consolidating,’” says DeVoe, noting that a small group of extremely large firms are creating consolidation at the top. His firm sees a 60% chance of a “mega-deal” in 2023.

“This will be the year where a few national brands become one,” says Goss. “RIAs that have reached a national footprint and significant profitability have separated themselves from the typical aggregator pack.”

Goss warns that this trend is narrowing options for smaller firms: “The ability to grow into a national firm is also quickly shrinking as the more established firms are outpacing with resources. This means smaller firms have two options, stop trying to scale and focus on cash flow or sell to a larger firm.”

Julius Buchanan, Managing Editor at Wealth Solutions Report, can be reached at


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