RIAs are increasingly shifting from inorganic growth – namely M&As – to organic growth, but many of them are facing challenges with their efforts to achieve that, according to “The Cerulli Report—U.S. RIA Marketplace 2025.”
“With inorganic growth proving to be a costly accelerant, new client acquisition has become the true test of scale,” Cerulli Associates said in an executive summary of the report, published Thursday.
In response, advisors are stepping up and “adapting, seeking new avenues for growth while investing in time-tested options,” Cerulli said in the executive summary, which was provided to reporters.
“Fueled by advisors demanding independence and strong market performance,” RIA assets grew at an 11% compound annual growth rate (CAGR) over the last decade, Cerulli noted. However, the RIA focus has been on inorganic growth through M&A activity.
“With M&A activity becoming commonplace in the market, the overall concentration is shifting back toward organic growth,” Cerulli said. “This renewed focus is exposing gaps in RIAs’ marketing and business development strategies.”
“In an ever-consolidating market, the need for positive net asset flows cannot be overstated, given their impact on the future of the RIA channels,” Stephen Caruso, Associate Director, Wealth Management at Cerulli, said in the release.
“The need for dedicated marketing, business development, and client service mindsets is crucial as firms seek to retool and refocus for their next stage of growth and opportunity,” according to Caruso. “Actioning these priorities is the challenge facing RIAs today as they seek to tap into new markets and leverage new technology in doing so.”
While 93% of $1 billion and over RIAs consider referrals as a top organic growth strategy, some “have been able to avoid more traditional marketing approaches,” according to Cerulli.
“Billion-dollar RIAs are finding organic growth success by tapping into legacy strategies like referrals and COIs with renewed vigor,” Cerulli said in the executive summary, also noting that some large firms are using multiple marketing strategies.
But the average RIA is “limited in its resources to drive organic growth, and advisor time constraint is a challenge,” according to Caruso.
A whopping 83% of RIA firms surveyed by Cerulli cited limited resources and advisor time constraints as a major or moderate challenge, the report said, with advisors only spending 7% of their time in business development. The research also showed that 57% of respondents said new client acquisition is a key challenge.
“As scale becomes the goal for many firms, building thoughtful and strategic marketing capabilities will establish a solid foundation for sustainable growth.” — Stephen Caruso, Associate Director, Wealth Management, Cerulli
Caruso added, “As scale becomes the goal for many firms, building thoughtful and strategic marketing capabilities will establish a solid foundation for sustainable growth.”
Cerulli predicted that the need for marketing support for strategic partners such as asset managers will increase as advisors exit the business. The firm said that strategic partners can maintain their lead by value-added content around branding and client personas.
Jeff Berman, Contributing Editor and Reporter at Wealth Solutions Report, can be reached at jeff.berman@wealthsolutionsreport.com.
