Advisor optimism on organic growth clashes with reality: SEI

Financial advisors have a more optimistic outlook on their organic growth than they did last year, according to new data from SEI, which provides custodian, technology and investment services to RIAs.

SEI recently hosted its annual advisor summit in Nashville, Tennessee. Of the more than 150 advisors surveyed by SEI, 81% said they are more optimistic about organic growth now than in 2025. Just 2% described themselves as pessimistic, despite other surveys showing industry-wide slowdowns for organic growth. For example, The Ensemble Practice's 2026 study found that organic growth – defined as new client relationships net of market appreciation – came in at 3.7%, which was near the lowest level the firm has recorded in its decade of benchmarking.

"We had nearly 80% of the respondents identify themselves as being optimistic around organic client growth going into next year, which is an interesting tidbit because we've seen very ho-hum, pedestrian organic growth rates when you look at the industry data," Gabe Garcia, head of RIA client strategy and experience at SEI, told InvestmentNews. "With respect to where assets and revenues are growing, it's really been market-driven growth that's driven the top-line on revenues, and share of wallet from existing clients. But actual net new clients has been a bit challenged for several years now."

Capacity constraint

Advisors surveyed by SEI named operational efficiency and scalability, including technology and AI, as their biggest challenge over the next three years, at 69.9%, followed by recruiting and retaining talent at 56.2%. Asked how their businesses will evolve, 26.7% pointed to a new hire, 24% to acquisitions and 18% to formalizing a succession plan. 

“The greatest inhibitor to growth in our industry really is capacity. Having the time, the resources, and the people to be able to attract new clients,” Garcia said.

He said about 58% of advisors are looking to use AI to reduce the capacity gap. "How do we insert [AI] into our back office operations to bring efficiency and scale to do work faster, better, with more efficiency, so that advisors can spend more time on the client experience and in front of clients or prospective clients," said Garcia.

A ‘blinking yellow light’ on profits

Market gains have masked the organic growth problem for RIAs. The Ensemble study found the average firm reported a 38.6% operating profit margin in fiscal 2025 – a sign that advisory firms are hitting record profits while their organic growth engine stalls.

“I think it’s actually a caution light, a blinking yellow light that firms need to take a look and say, if the median is approaching 40%, should we be thinking about how we’re investing our profits for the future and for growth?” Garcia said. "Markets have created asset appreciation, but because of slow client organic growth, you're not adding more clients, which require more resources and more people."

Garcia also said that he sees most firms underinvesting in marketing that could be used to drive organic growth. A 2024 survey from Broadridge Financial Solutions found that advisors were spending on average about $16,000 per year on marketing.

“Investing in marketing—most firms are investing 2%, 2.5% of top-line revenue, which is very low when it comes to service businesses,” Garcia said. “They should be looking at 4% to 6% top-line revenue investment in marketing to create awareness.”

Younger clients reshape fee models

Pricing models for advisory firms are shifting, according to SEI's data. While 47% of advisors still charge on assets under management alone, 53% have added or are considering subscription, retainer or flat fees.

Garcia attributes the change to fitting millennial and Gen Z clients, who have normalized subscription payments in their other areas of consumption.

“As they look at the Amazons and the Netflix of the world, and they look at subscription-based pricing, or they look at other consumer services where it’s fixed pricing, they’re entertaining that,” he said. “They’re looking for that as the entry point into a longer-term relationship. The demographics and consumer behaviors of the next generation of wealth creators that are entering that space and looking for advice, are quite frankly almost demanding a different pricing model."