Podcast Summary: Thoughts on the Market

Episode: An M&A Boom for Financials

Date: October 13, 2025
Hosts: Betsy Grasic (US Large Cap Banks Analyst & Global Head of Banks and Diversified Finance Research), Mike Cypress (Head of US Brokers, Asset Managers and Exchanges Research)

Episode Overview

This episode focuses on the growing trend of mergers and acquisitions (M&A) in the asset management and wealth management sectors. Betsy Grasic and Mike Cypress explore what is fueling the race for scale, how deal activity is shaping up, and the key implications for investors and industry players as firms seek to consolidate for greater competitiveness and efficiency.

Key Discussion Points & Insights

1. Industry Growth Outlooks

• Asset Management

  • Industry size: ~$135 trillion in assets under management (AUM) managed for a fee.
  • Growth Forecast: 8% annual growth over the next five years.
  • Drivers:
    • Private markets: Rapid rise anticipated as both institutional and retail investors allocate more to this asset class (“democratization of private markets”).
    • Solutions-based products: Addressing demographic challenges (e.g., aging populations) by offering products like retirement income solutions, tax-efficient strategies, model portfolios, and outsourced CIO mandates.
    • Notable quote:

      "We expect this democratization of private markets to play out and we see that being helped by product innovation, investor education and technology advances." — Mike Cypress [01:11]

• Wealth Management

  • Industry size: $301 trillion globally, expected to reach $393 trillion by 2029.
  • Growth Forecast: 5.5% compound annual growth rate (CAGR), slower but starting from a larger base compared to asset management.
  • Key Opportunities: Expansion in ultra-high-net-worth and affluent client segments and increased efficiencies from technology.
  • Insight: Both asset and wealth management have been highly fragmented due to lower capital needs compared to other financial sectors.

2. Drivers of M&A in Asset Management

• Scarcity of Growth:

  • Clients are working with fewer asset managers, reducing the number of available “slots” for these relationships by up to a third in coming years.

    “Growth is becoming a bit more scarce with clients working with fewer partners...over the next five years we expect the number of available slots to continue to decline upwards of a third.” — Mike Cypress [03:48]

• Consolidation of Providers:

  • “Winners” (the largest firms) are capturing more new assets, leveraging scale to reinvest in capabilities and relationships.
  • Concentration is pushing mid-size firms ($0.5–2 trillion AUM) to pursue deals for scale and cost efficiency.

• Stressors:

  • Rising business costs (including AI investments), evolving client needs, and profit pressure are driving consolidation, especially for mid-sized managers.

3. Types & Trends in M&A Activity

• Partnership Models:
  • Increasing experimentation with joint ventures and alliances, e.g., private market managers accessing retail channels without building full infrastructure.
• Deal Types:
  • Intra-sector: Acquisitions within the same sector (e.g., asset manager buying another asset manager for scale or distribution).
  • Inter-sector: Deals crossing sectors (e.g., asset management merging with wealth management or insurance to own more of the value chain).
  • Financial sponsor deals: Private equity or other sponsors investing in asset or wealth managers.
  • Notable quote:

    “Experimentation around partnership will only accelerate...It allows private market managers to access retail distribution without owning the end infrastructure.” — Mike Cypress [05:50]

• Outcomes:
  • Historically mixed successes, but expectations are that industry players will adapt to make future M&As more effective—especially if they address cultural and integration challenges.

4. Wealth Management Consolidation Drivers

• Succession Planning:
  • Aging population of advisors is driving M&A as firms manage transitions and maintain client service.
• Need for Scale:
  • Increased costs (IT, AI, cyber risk management) force smaller players to seek partners or buyers.
• Capital Deployment:
  • Large banks with excess capital are expected to increasingly pursue wealth management acquisitions, motivated by the industry’s high return on equity and strong market valuations.
  • Notable quote:

    “Wealth management is one of the best, if not the best, financial institution service for shareholders. It is a high ROE business...commands a high multiple in the stock market.” — Betsy Grasic [08:36]

Notable Quotes & Memorable Moments

• On Industry Fragmentation:

  "Both asset management and wealth industries have been very fragmented for a very long time...they need less capital to operate successfully." — Betsy Grasic [02:55]

• On Candidates for M&A:

  “…particularly a challenge for those mid sized money managers...half a trillion to 2 trillion in size, making them more likely to pursue consolidation opportunities.” — Mike Cypress [05:20]

Important Timestamps

• 00:01 – Introductions and episode setup
• 00:45 – Asset management industry outlook
• 02:15 – Wealth management industry outlook
• 03:48 – Discussion of increased M&A drivers
• 05:45 – Types of deals emerging in the new M&A cycle
• 07:35 – Specific drivers of consolidation in wealth management
• 08:36 – Why banks are attracted to wealth management M&A
• 09:07 – Episode wrap-up

Episode Tone & Energy

The conversation is analytical, data-driven, and forward-looking, with an emphasis on the strategic rationale behind industry consolidation. The hosts maintain a professional, insightful, and approachable tone, making complex market trends accessible for investors and industry watchers.

Summary prepared for listeners who want a deep dive into current M&A trends in financials without needing to hear the full episode.