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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