You ain't seen nothing yet when it comes to asset management M&A, and one of the biggest players in the business might even get in on the action, too.

Charlie Morrison Fidelity President of Asset Management

So says Charles Morrison, asset management chief at Fidelity [profile], in an interview with the Financial Times' Robin Wigglesworth. Boston-based and privately-held Fidelity has traditionally preferred building to buying, yet according to Morrison, Abby Johnson's Boston Behemoth is now "open to anything" when it comes to acquisitions.

"Merging cultures is a wild card, but if there are some real opportunities we'd look at it," Morrison tells the FT.

The article offers no hints as to what asset management deals Morrison and Johnson might be interested in, beyond noting that Fidelity's "only major recent acquisition" was financial planning software specialist eMoney adviser in 2015, a $250-million deal.

About 1,000 firms offer some kind of open-end mutual funds (including ETFs) in the U.S., and a couple thousand more are purely institutional asset managers. Some big multinational, publicly-traded asset managers like Janus and Henderson (expected to merge next month), Standard Life and Aberdeen (also merging), and Amundi (which is buying Pioneer) are doing deals. And smaller firms, like Touchstone (which just yesterday unveiled a deal to buy Sentinel) and Raymond James' Carillon Tower Advisors (which this morning unveiled a $172.5-million deal to buy Scout) are merging or acquiring for scale, too.

"The trend is pretty clear. Margins will continue to come under pressure," Morrison says to the paper. "The industry is going to look very different in five years. There will be fewer and larger managers."

In a separate interview with Reuters, Larry Fink, CEO of BlackRock, echoes Morrison's asset management M&A predictions. Yet Fink insists that his publicly-traded giant is "not going to be a big participant" in that consolidation, at least in asset management; earlier this week he told Bloomberg that he plans to make more technology acquisitions.

Citi analyst Haley Tam, in a client video highlighted by the FT, offers a glimmer of hope for all this impending M&A.

"Historically asset management M&A doesn't have a particularly good reputation. But synergies can be pulled out," Tam reportedly says. "If nothing else, regulatory costs and burden is rising for the industry. If you have more assets, if you have a bigger revenue stream, you have a greater ability to handle this cost."  

Edited by: Neil Anderson, Managing Editor


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