Why is WA so attractive for advice M&A?

While M&A has ramped up nationwide, three advice heads have explored Western Australia’s emergence as a region of interest among medium-sized firms vying for growth opportunities in an increasingly competitive market.

According to Morgan Stanley’s recent report, The race for relevance fuelling M&A, produced with consultancy Oliver Wyman, there have been more than 200 significant M&A transactions per year since 2022, occurring at twice the pace of the preceding decade, with suggestions this trend is likely to continue for the rest of this decade at least.

And although there is a strong M&A trend across the country, it would seem Australia’s west coast is primed for strong consolidation in the coming years.

Last November, Jane Tandy, Michael Brindal, and Aaron Constantine from Canaccord Genuity and Jason Featherby from Knight Group teamed up to launch their own Western Australian wealth management firm, Leeuwin Wealth. 

Speaking with Money Management at the time, Tandy said the firm was determined to maintain its Western Australian presence as east coast firms began eyeing acquisition opportunities in the west.

Almost a year later, Tandy said, much like the rest of the advice market, Western Australia is now undergoing a “notable phase of consolidation and strategic repositioning”. 

Tandy pointed to the recent acquisition of Wilsons Advisory, which has offices across the country, including in Perth, by Canaccord in August, as a “prime example” of changes in the Western Australian market.

The March acquisition by Wilsons would be offering specialist corporate advice to the state’s mining and resources companies – a huge employer in the state.

She added: “Similarly, Euroz Hartleys is reportedly in early-stage discussions with the Bank of Montreal, which could mark another major shift in WA’s financial services landscape.

“While the volume of M&A may not be high, the quality and strategic intent behind these transactions signal a maturing market. Succession planning, rising compliance costs, and the need for tech investment may be driving firms to seek scale and sustainability through consolidation.”

Expanding on this, Justin Gilmour, managing partner of Western Australia-headquartered Integro Private Wealth, told Money Management that the increased desire for scale among advice firms comes amid growing demand for advice in the region, with the impending intergenerational wealth transfer, particularly among high wealth earners.

While the same can be seen across the country, he said that, due to the smaller pool of talent available in Western Australia and the steady outflow of ageing advisers, talent acquisition has become a key driver behind M&A in Perth.

“The number of advisers doesn’t really seem to be going up at all. So, finding some way to build out your staff, M&A seems to be the way that you have to do it,” he said.

As Integro prepares to enact its own M&A plans nationwide over the coming months with several key appointments, Gilmour suggested that medium-sized advice groups will likely take on a lot of the smaller, one-man band practices that are seeking acquisition opportunities, rather than private equity firms.

The impending education deadline is also set to play a part in accelerating M&A activity in the industry, he explained, as those who are unable to meet the requirements to continue practising come 1 January look to sell up.

Earlier this year, the Financial Advice Association Australia (FAAA) said an estimated 1,000 advisers are expected to leave the profession at the end of this year, the majority of which Gilmour suspects will be single-adviser practices.

“With the education deadline coming up at the end of the year, we’re expecting to see, I think the estimate is like 1,000 advisers exit, and it’s quite likely it’ll be a lot of those single advisers, smaller practices that are going to see those losses,” Gilmour said.

In a similar vein to Gilmour and Tandy, Ben Calder, executive director of Calder Wealth Management and part of the Coastal Advice Group, said he believes succession planning is a key trigger for smaller practices seeking M&A opportunities as ageing advisers start considering their own retirement.

However, the lack of new talent flowing into the profession leaves them with few options when it comes to appointing their future replacement, despite having spent years building small yet valuable practices.

“There’s a lot of, there’s smaller firms out there have just done a great job in applying their trade, if you like, and seeing clients and taking on a few clients each year, year on, year on year, for a long time, and they’ve ended up with reasonable sized businesses that are quite valuable now, and they haven’t been able to manage succession internally,” Calder said.

In September, Coastal Advice completed the acquisition of three businesses, including SRM Wealth Solutions, a single-adviser firm in the Rhombus network based south of Perth in Port Kennedy.

This acquisition marked the latest in a steady flow of growth for the group, with Calder suggesting the group has more plans in the pipeline, including some expansion in Western Australia.

While consolidation has been an ongoing trend in the advice market in recent years, Tandy noted a rise in new boutique advisory firms in Western Australia. These types of firms are particularly well-suited to the region’s market, she said, as clients place higher value on “investment transparency, personalised service, deep relationships, and local expertise”.

While this might suggest that a firm from the eastern seaboard trying to establish a foothold in Western Australia may face challenges, Calder said that when Coastal Advice – which is largely an east coast group – has completed regional acquisitions, keeping the ‘local DNA’ of the firm is essential.

“Even though it’s an east coast-headquartered business, we’ve got great people all over Australia. We understand that’s what locals want in the regions, and we very much keep that DNA as part of those offices around the country,” Calder said.

“The last two acquisitions we did in WA were both that ‘white flag’, looking for succession for their team and their clients, and in all cases we’ve retained the staff in those acquisitions as well, which is key.”