Registered investment advisory firms, especially small ones, are returning to the bargaining table this year. In the first quarter, RIA firms completed 24 merger and acquisition deals totaling $19 billion, according to a recent report from Schwab Advisor Services. It is the biggest first quarter yet in terms of the number of transactions, according to Schwab's research, which goes back eight years. In the first quarter of 2009, the nadir of the market meltdown, RIAs completed 19 M&A transactions.

In 2010, smaller RIA firms were the most likely to take a seat at the bargaining table, says Dave DeVoe, managing director of the strategic business development group at Charles Schwab. More than half of the deals, 58%, were among financial advisors who had less than $250 million in assets under management. Further, the average AUM of firms involved in transactions in the first quarter of 2010 was $842 million, down from $1.6 billion for the first quarter of 2009, according to Schwab. One reason for this may be that principals of smaller firms are more willing to consider M&A transactions as a retirement strategy.

The stock market's rebound helped account for this year's strong showing. During the market declines of 2008 and 2009, many advisory firms put their M&A deals on the back burner. "Now we're seeing an uptick driven by the reengagement of some of those deals," DeVoe says.

The downturn is one reason Seattle-based Moss Adams Wealth Advisors took 18 months to acquire San Diego-based Rowling Dold & Associates this past January. Talks between the companies became more substantive after the market stabilized, according to Sheryl Rowling, a partner at Moss Adams.

Now that the industry has gotten past the downturn, DeVoe says he expects M&A activity to flourish for the next five to seven years. Private equity firms and holding companies, he says, will continue to make investments in RIA firms.