Mid-sized RIAs are losing a disproportionate share of advisor time to investment operations work, and the firms that have not restructured those functions are operating at a structural disadvantage to peers that have.
That's according to a new paper by wealth tech consultancy The Oasis Group, published with support from AdvisorEngine Portfolio Solutions.
The new paper focuses on principals and leadership teams at firms managing between $100 million and $1 billion in AUM, which it argued faced the tightest tension between growth and operational capacity.
Citing Fidelity's 2024 RIA Benchmarking Study, the paper said advisory expenses at smaller RIAs reached 82% of revenue in 2023, leaving operating margins at a record low of 18%.
The 2025 InvestmentNews Advisor Benchmarking Study found the most profitable firms hold overhead to 25.7% of revenue while serving nearly double the clients per professional compared to peers. That gap, according to the Oasis Group, comes down primarily to differences in operating model rather than client mix or revenue strategy.
The "operational paradox" for RIAs comes from the fact that growth creates its own operational drag. As firms add clients, principals absorb more execution work – portfolio rebalancing, trade oversight, model drift monitoring, performance reporting – that does not add revenue but competes directly with client-facing time.
"Principals find they are not building a firm; they are buying time in six-month increments against a problem that requires a fundamental shift in the operating model,” The Oasis Group CEO John O’Connell said in a statement.
Supporting data from Fidelity's research on advisor productivity found that just 1 in 5 advisors effectively outsource or delegate tasks, and only 38% say they use technology effectively. Advisors who do outsource investment management save an average of seven hours per week. Fidelity's research further estimates that combining outsourcing with strategic use of generative AI could free up as much as 10 hours weekly.
A Financial Planning Association survey found that while 93% of advisors describe themselves as growth-motivated, only 12% report satisfaction with their actual growth rates – a gap the paper frames as a capacity problem rather than a strategy problem.
In the most recent F2 Strategy Wealth Management Trend Report, 79% of wealth management firms said they are planning changes to their operating model within the next 12 to 24 months, with satisfied and dissatisfied firms almost equally likely to signal change is coming.
The paper's most specific claim concerns the economics of running investment operations in-house versus outsourcing to a turnkey asset management program.
For a firm managing $250 million in AUM, it estimates the fully-loaded cost of in-house investment operations at 25 to 35 basis points annually – between $625,000 and $875,000 in dollar terms; that's once principal time at realistic market rates, research subscriptions, trading platform fees, and compliance oversight are factored in. A TAMP at comparable scale, meanwhile, typically costs 10 to 20 basis points, or $250,000 to $500,000.
Because in-house costs are largely invisible on the income statement – scattered across salary lines and untracked time – firms tend to overestimate the relative costs of outsourcing to TAMPS that charge fees as a discrete expense, according to the paper.
Read more: Despite myths, TAMPs help advisors save time
The paper also touches on the RIA consolidation wave, arguing that operational restructuring has become a strategic imperative for M&A success. Private equity-backed aggregators have built their acquisition models in part around extracting margin from founder-led investment operations post-close, typically by migrating those operations to a TAMP the acquirer already uses at scale.
Because independent firms can capture the same operational leverage themselves, the paper sees an opportunity for them to improve their valuation while preserving their strategic options between independence, succession, or a sale.
The Schwab 2025 RIA Benchmarking Study, which tracks time spent on client service versus investment operations as a core performance metric, found indie firms that recover operational time consistently outperform across AUM bands and investment philosophies.
While the Oasis Group draws a line between outsourcing and automation, it says firms need both strategies – engaging a specialist in investment management while using rebalancing platforms, integrated billing, and compliance workflow tools – to eliminate the burden of recurring operational work.
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