Wells Fargo Leads Charge for Wealth Management

NEW YORK ( TheStreet) -- Wealth management acquisitions are poised for a pickup later this year, with the latest rumors in the sector centered on the possibility that Wells Fargo ( WFC) would want to acquire UBS ( UBS) U.S. wealth operations.

Wells Fargo Chief Executive John Stumpf has said in several interviews that the firm is on the hunt for acquisitions in its wealth management business. Since 2009 there has been speculation that UBS, has been in talks with Wells Fargo about selling its U.S. wealth management business to shape up after the financial crisis.

"It makes sense. Wells has integrated a lot of acquisitions and by doing this one they would be just as big as Bank of America Merrill Lynch ( BAC) and Morgan Stanley Smith Barney ( MS)," said Jeff Spears, a co-founder and CEO of Sanctuary Wealth Services LLC. "The two have different types of clients so there would be little overlap."

Wells list of recent acquisitions includes Wachovia Corp., A.G. Edwards & Sons Inc. and First Union Corp.. The bank is expected to finish its integration of Wachovia by the end of this year.

John Dowd, regional managing director for the Northeast Region of Wells Fargo Wealth Management told TheStreet that the firm did have the opportunity to make some acquisitions. Although Wells Fargo stated of the rumors that Wells was pursuing UBS wealth management that, "Any talk about a possible Wells Fargo deal with UBS is based on pure rumor and speculation."

Wells is not the only bank pursuing acquisitions in wealth management right now, Bank of New York Mellon ( BK) is also seeing opportunity in the market to make acquisitions, Lawrence Hughes, CEO of BNY Mellon Wealth Management told TheStreet.

"We are always looking for quality firms," says Hughes. "We would be interested in firms in the Dallas, Houston, and Phoenix areas and internationally we would be interested in expanding in Brazil or the Asian markets."

Dowd said there are several wealth management firms and registered investment advisories that could be rolled up this year due to regulatory and compliance costs pose capital challenges for smaller wealth management brokerages.

"Besides the regulatory costs, you have to have the investment in the infrastructure which a lot of smaller firms don't have to compete. In addition, a lot of the smaller firms can't differentiate products their clients want," said Dowd.Hughes says that there will be more consolidation as principals of smaller firms retire, smaller firms look to broaden product lines for clients.

"I would be very surprised if we didn't see a rise in wealth management acquisitions this year. We saw 40 transactions last year and I think we will see a lot of the smaller firms get scooped up by larger players this year," said Hughes. "There are a lot of baby boomers that have been waiting to retire."

"There are a lot of firms looking for an exit strategy," confirmed Spears. "These sellers are a little desperate because valuations are not that great and they have been waiting three years to sell."

--Written by Maria Woehr in New York.

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