The wealth management industry has experienced a wave of consolidation over the past decade or so, driven by investors hungry for growth and reliable cash flows.
But on closer inspection, the M&A activity can be divided into two distinct waves of dealmaking, one that appears to be far into running its course and another that’s gathering steam.
Independent broker-dealers have been so consolidated at this point that the space is almost unrecognizable compared to 13 years ago. In 2012, the top five broker-dealers controlled 47% of total revenues. In 2025, the top five broker-dealers, which changed tremendously, accounted for an astounding 72% of total revenues. Three firms have driven much of this consolidation: LPL Financial, Osaic and Cetera Financial Group.
With less consolidation available in the broker-dealer space, the M&A engine, driven by private equity dollars, is increasingly targeting RIAs, in large part because the RIA space is still highly fragmented and thus ripe for consolidation. Of the 17,000 retail RIAs that operate today, 80% manage less than $250 million in assets under management (AUM).
But fragmentation is the not only reason why private equity is favoring RIAs over broker-dealers. The RIA model, with its emphasis on entrepreneurship, innovation and speed, offers more growth opportunities versus broker-dealers.
As a result, RIAs are consolidating at a historic pace. For the first half of this year, the industry has witnessed 148 transactions, an all-time high for the first six months of a year and a 17% jump over the same period in 2024, according to DeVoe & Company.
M&A activity for RIAs is accelerating despite volatile equity markets, unpredictable interest rate expectations and extreme global geopolitical events, the report said.
Broker-dealers still experience consolidation. But when it comes to M&A activity, RIAs clearly have the wind at their back.
Investors Favor Wealth Management
Whether broker-dealers or RIAs, the wealth management space offers investors plenty of reasons to invest in its growth.
The wealth management industry “presents a compelling opportunity for investment partnerships and other highly capitalized organizations,” said Bryan Staff, Founder and Managing Partner at Merchant Investment Management, which is invested in over 100 RIAs, hybrid RIAs, third-party services and firms containing broker-dealers.
“Its attractiveness stems from several factors, including the recurring and durable cash flows generated by wealth management businesses. A large and expanding addressable market fueled by continued global wealth creation provides significant growth potential.”
Private Equity Players Still Invest In Broker-Dealers, But Favor RIAs
David Devoe, Founder and CEO of DeVoe & Company, said private equity firms are still selectively investing in larger broker-dealer platforms that offer scale, recurring revenue and potential for modernization. But few, if any, are launching new independent broker-dealers.
“In contrast, new RIAs continue to launch and scale, growing in both size and sophistication,” DeVoe said. “Today’s larger RIAs aren’t just seeking capital, they’re looking for partners who can add strategic value and support long-term growth. As a result, PE firms are facing tougher competition for deals and engaging with a more informed, discerning group of sellers.”
He said his firm has found that 72% of all RIA transactions in 2024 involved private equity, “a clear sign of how central private capital has become.”
“Most of the largest RIAs now have PE partners, giving them the resources to scale aggressively and compete at the highest level,” he said.
Why Private Equity Prefers RIAs Over Broker-Dealers
“Independent RIAs differentiate themselves through personalized experiences and cutting-edge solutions that larger, more institutionalized broker-dealers struggle to deliver,” said Andree Mohr, President at Integrated Partners. “Unlike traditional broker-dealers, RIAs have streamlined decision-making processes, enabling them to adapt to market trends and execute strategic initiatives with speed and precision.”
“The RIA model also offers multiple monetization avenues, with fee-based planning and advisory services delivering recurring revenue and higher margins,” she said.
“Additionally, the RIA space is generally ahead in leveraging technology to streamline operations, personalize client engagement and enhance advisor productivity—further strengthening enterprise value.”
Jacqueline Martinez, Managing Partner at Alaris Acquisitions, said that RIAs are more attractive to private equity because they have stronger margins, recurring revenue and bear a lower regulatory burden than broker-dealers.
She pointed out that the RIA space is more fragmented than the broker-dealer space, providing efficiencies for roll-ups by centralizing functions. Also, the fee-based revenue of RIAs is more stable and less regulated than the commission-based revenue of broker-dealers.
“The broker-dealer model entails more rules and restrictions,” Martinez said, due to double regulation by FINRA and the SEC. “The simpler, more scalable structure of RIAs makes them a more attractive play for private equity investors looking for long-term growth and operational efficiency.”
Mohr added, “RIAs are platforms poised for innovation and national scale making them very attractive investment opportunities.”
How Advisors Should Evaluate Private Equity Backing
According to Jeff Nash, CEO and Co-Founder at Bridgemark Strategies, “There are three different ownership structures in the industry: publicly traded, private equity owned and privately owned. To be clear, there are a lot of advisors looking to change BDs who don’t care about the ownership structure at all.”
Even in those cases, Nash warned, “Advisors should at least understand the advantages and disadvantages of the different ownership structures of any firm they are considering joining as each has both pros and cons.”
“If it’s an RIA that is private equity owned and they are going to get equity in a possible transaction – that’s a positive,” he said. “If it’s an independent broker-dealer that might sell to a random strategic buyer – that’s a negative. While both scenarios are possibilities, ultimately private equity ownership should be viewed as one of many factors used to compare two firms as advisors are narrowing down and evaluating finalists and shouldn’t be viewed as necessarily good or bad in and of itself.”
Larry Roth is CEO of Wealth Solutions Report and Managing Partner of RLR Strategic Partners.
