Not all growth is good. Like carbs, some types are healthier than others. Data shows the RIA channel of wealth management is growing at a faster rate than other sectors. And this trend is expected to continue. Given the inherent appeal of the model – its flexibility, income potential, autonomy and monetization prospects – that’s not a surprise.
When you consider the demographic pressures of an aging advisor population and an impending shortage of advisory practitioners, it’s more important than ever that RIAs approach their expansion efforts mindfully, considering the how, why, when and – importantly – who. Growth for growth’s sake is in no one’s best interests. Ensuring potential partners are a good fit is imperative. And that means both sides of the table benefit in ways that matter to them.
With an ecosystem poised to benefit from business-friendly regulatory and tax policies of a new administration in Washington, what will the RIA recruiting landscape look like in 2025?
To help decipher the possibilities, we spoke with three industry executives experienced in recruiting to share their outlooks on RIA recruiting for this year, as well as how their firms are positioning themselves to optimize opportunities and overcome challenges:
- Jason Inglis, Chief Revenue Officer at Sowell Management, a privately held North Little Rock, Arkansas-based RIA firm serving IARs and RIAs across the country
- Eddie Rollins, Managing Director at BridgePort Financial Solutions, an RIA serving fee-only independent advisors, and wholly owned subsidiary of Cambridge Investment Group
- Vince Fertitta, President of Wealth Management at Sanctuary Wealth, which provides a platform for advisors, including technology, operations and community, with multiple affiliation models
Here’s what they had to say:
Jason Inglis, Chief Revenue Officer, Sowell Management
Jason Inglis: We believe that RIA recruiting will continue in earnest in 2025, with advisors seeking new opportunities to gain or realize enterprise and equity value for their businesses, and buyers becoming better capitalized and familiar with the space. The RIA industry is at a very interesting inflection point. Market dynamics are such that even though each year we seem to set a new record in RIA M&A, there are actually more RIAs being created each year than sold, merged or accumulated.
The tailwinds and headwinds run hand-in-hand: Successful sellers need to focus on the true value of their businesses – the client relationships and the associated fee-based revenues – and avoid the increasing “multiple” noise to seek out partners that accomplish more of their goals than simply money. Buyers need to do the same and seek out partners that fit smoothly into their model and not fall in love with the deal (instead of the advisor). Buyers and sellers that do not prioritize fit, do so at their own peril.
As competition has steadily increased, specifically over the last five years, sellers must continue to streamline their operations and businesses in 2025 and become laser-focused on the goals they want to achieve with their business and legacy. Buyers will continue to seek out advisors aggressively, however, the increasing cost of capital and, in some cases, the need for ROI from capital partners, will cause buyers to be more selective in 2025 and seek out RIAs that “fit” into their specific models.
We also see an opportunity in 2025 for acquirers to begin acquiring other acquirers – say that three times fast – and we will begin to see RIA consolidation of ever increasing size.
Optionality is key. At Sowell Management we have a different take on advisor acquisition. Advisors can work with Sowell as RIAs, IARs, or join one of our advisor’s practices. Additionally, there’s an option for Sowell to take a minority investment or a total acquisition of an advisor’s practice. The only similarity among advisors working with Sowell is their fierce independence. By offering the advisor optionality, we believe that we will set ourselves apart in a very crowded marketplace.
Eddie Rollins, Managing Director, BridgePort Financial Solutions
Eddie Rollins: In 2025, we can expect to see an increased emphasis on acquisitions for RIAs whose primary CEOs or business owners are over the age of 60. Those who want to sell their business are going to be more informed about all the opportunities – as well as potential pitfalls – of a successor or acquisition. They will be more focused on the culture and leadership aspects of a potential partner or acquirer, and how that firm will ensure the seller’s legacy continues once they leave the business. As more and more of the original deals from several years ago mature, we will start to see and hear both the positive and negative outcomes of those deals.
I expect to see RIAs place greater emphasis on ensuring the right people are in the right roles, especially as it relates to succession planning. CEOs who started their practices 25 to 30 years ago are now less involved in their client relationships. Though they may work closely with a small portion of their firm’s clients, they are more involved in the day-to-day running of the business.
As they look at succession, one of the challenges that those business owners will face is identifying the next level of leadership or the next CEO. Just because the most senior relationship advisor has been with them for 10 years does not necessarily mean they have the skill set to step into that CEO role and continue their vision and legacy.
When it comes to building a firm, investing in people and creating a dynamic culture are the two attributes that lead to finding and retaining new talent. It’s important to remember that culture is developed by present and past leadership, and it cannot be bought or packaged. The most attractive firms will be independent, have strong, united leadership teams and place heavy emphasis on mentoring Next Gen advisors.
As the battle for talent rages on, firms that support an entrepreneurial spirit and provide a robust infrastructure for professional development will stand out because advisors are increasingly looking for a culture that allows them to personally flourish and prioritize helping them build lasting, client-centric practices.
Vince Fertitta, President Of Wealth Management, Sanctuary Wealth
Vince Fertitta: I believe recent events, mostly surrounding compensation changes at large wirehouses, will increase the likelihood of a significant recruiting year in 2025 across the independent space. UBS’ recent compensation cut serves as a wake-up call to all employee advisors that they are not in control. This may accelerate the move to independence for advisors previously on the fence.
At Sanctuary Wealth, we are well positioned to compete in this space because of our full range of solutions, especially since acquiring tru Independence last year. Today, advisors can engage with Sanctuary through their own ADV or our shared ADV, choose from leading custodians, leverage our broker-dealer or support an advice-only practice, and more. In addition to the enhanced flexibility and choices, we have the experience. We’ve successfully completed this process more than 120 times.
New entries from reputable industry leaders are popping up to meet expected demand, further affirming the advantages of the independent model. Sanctuary benefits from being one of the more mature independent options out there. For the past six years, we’ve built a reputation as a robust platform with the resources and experience to support former captive advisors looking to go independent. We service 120 partner firms with more than $50 billion on the platform and offer solutions that match or exceed the capabilities of those at the wirehouses.
Firms hoping to take full advantage of these recruiting trends must provide flexibility and choice at every point of an advisor’s career. Sanctuary’s newly launched Enterprise Partner Program allows our established partner firms to become accredited and participate in supported M&A-based growth while providing additional avenues to develop a succession plan. This gives our partner firms another avenue for expansion. It also allows other advisors to join a nimble, growing, independent practice without having to build one from the ground floor. Again, it comes back to flexibility and choice.
Janeesa Hollingshead, Contributing Editor at Wealth Solutions Report, can be reached at editor@wealthsolutionsreport.com.
