Something that seems to be underpinning the takeover rush is an emphasis on becoming ‘nationwide’. Wealth managers have traditionally either been London based and focused, or have carved out a particular regional slice of the market to target. We could be seeing the beginning of the end for the latter business model.
It makes a lot of sense for a wealth manager to be able to serve the whole country rather than one region. Apart from the simple numbers- a bigger catchment area brings you more potential clients- there is the fact that people move home, and may value having a ‘bricks and mortar’ presence from their advisers nearby.
Also it is hard to dispute that being a national player rather than regional rightly or wrongly brings increased status and credibility in many eyes.
You can have too much of a good thing however.
There is a danger that the bandwagon will roll out of control as firms collectively take the view that that must buy or be bought, or they will be forced out of business by bigger competitors.
It would be premature to say that is where we are now, but if the deals keep coming any firms not active in the market may increasingly fear that they will be left behind, and so rush to action.
