RIA consolidation is accelerating as financial advisors increasingly turn to M&A for scale, to respond to changing client demands, and to keep pace with new platforms and technologies, Cerulli said Wednesday while announcing findings from the latest Cerulli Edge—The Americas Asset and Wealth Management Edition.
The trend is significantly changing the competitive RIA market – changes that include the creation of new players in a market that Cerulli estimates will surpass $4 trillion over the next decade, it said.
The report said the most addressable market for acquisitions comes from advisor retirements, with over 26,000 retirements projected in the next decade.
“On average, these retiring advisors have larger books of business than employee advisors looking to break away,” Stephen Caruso, Associate Director at Cerulli, said in a news release.
Many RIAs are evaluating exit strategies, according to Cerulli, with 54% of RIAs seeking an acquisition. That number has increased over the years as firms recognize the opportunities, the firm said.
“Hybrid RIAs are the most acquisitive independent channel, and most RIAs are at least somewhat interested in acquiring other firms.” — Cerulli
“Hybrid RIAs are the most acquisitive independent channel, and most RIAs are at least somewhat interested in acquiring other firms,” the firm said in a summary version of the report supplied to reporters.
“In the fragmented registered investment advisor (RIA) realm, the consolidator market continues to grow, having eclipsed $2 trillion in 2024, and the role of capital sponsors is ever-changing,” Cerulli goes on to say in the report.
“The majority of the largest private equity (PE) firms already are players in the space, and there is growing interest among other investors including sovereign wealth funds and large insurance carriers,” the report says.
Cerulli’s research also points to a major acquisition opportunity among breakaway advisors.
However, although “opportunity exists” among breakaways, “these acquisitions have been challenging to execute over the past few years due to the complexity of exit strategies from captive broker/dealers,” the firm said in the news release.
Jeff Berman, Contributing Editor and Reporter at Wealth Solutions Report, can be reached at jeff.berman@wealthsolutionsreport.com.
