Registered investment advisor (RIA) consolidators now account for $1.5 in assets under management (AUM), according to a new release from Cerulli Associates.
According to the report, in 2018, 6% of advisors in RIA channels were affiliated with a consolidator. By 2023, advisor headcount grew to 14%—an eight-point increase. Cerulli notes that RIA consolidators have maximized on the growth by building platforms that cater to advisors’ needs.
A greater number of consolidators are also offering technology platforms to potential advisors and practices they seek to acquire, as tech services prove costly for advisors. Cerulli findings show that 55% of advisors say an integrated technology platform is among the most-valued services offered by a consolidator.
“Fundamental to RIAs’ needs, technology tools have become a costly and complex component of advisory practices,” says Stephen Caruso, associate director at Cerulli. “Many consolidators have successfully constructed centralized technology platforms that give advisors access to a best-of-breed technology stack where internal technology teams manage the tools. By plugging their advisors into a single system of record, firms can seek better efficiencies in integration and a greater overall picture of their business,” he adds.
Other key services include succession planning, of which 50% of advisors list as a “highly valued” service from consolidators. As a growing number of advisors plan to retire out of the workforce in the coming decade, Cerulli expects more consolidators to put a greater emphasis on their succession planning services. In its findings, the firm reports that 37% of RIA channels’ advisors will be retiring within the next 10 years, thereby “putting 35% of channel assets in motion.”
Among RIAs, 74% consider succession planning or exist strategies as an important factor that would impact their decision to join a large RIA platform or aggregator.
“As this wave of consolidation rolls across the industry, advisors will be increasingly confronted by opportunities to sell their business or affiliate with a large RIA acquirer,” says Caruso. “RIA acquirers looking to differentiate themselves can do so by building a stronger framework of opportunity around the advisor.”
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Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with over six years of experience and a passion for telling stories and reporting news. Amanda received her degree in journalism and government and politics at St. John’s University. She is originally from Queens, New York, but now resides in Denver, Colorado with her partner. In her free time, Amanda enjoys running, cooking, and watching the latest drama show.
