Billion-dollar RIAs prioritize organic growth as industry consolidation accelerates

Billion-dollar RIAs are shifting their focus from mergers and acquisitions to organic growth as consolidation continues to reshape the wealth management industry, according to new research from Cerulli Associates.

The findings highlight both the opportunities and persistent challenges facing large advisory firms as they seek to sustain their momentum.

The RIA channel has expanded rapidly over the past decade, with assets growing at an 11% compound annual growth rate. From 2023 to 2024 alone, RIA assets increased by 16.4%, and advisor headcount rose by 6.7%.

According to the most recent industry snapshot by the Investment Adviser Association, there were 15,870 advisers as of 2024, while AUM rose to $144.6 trillion – a 12.6% annual gain.

Despite these gains, 57% of RIAs consider new client acquisition to be a leading challenge, and 83% of billion-dollar RIAs cite a lack of advisor time as a key constraint in implementing organic growth strategies.

“In an ever-consolidating market, the need for positive net asset flows cannot be overstated, given their impact on the future of the RIA channels,” said Stephen Caruso, associate director at Cerulli. He added that firms must develop dedicated marketing, business development, and client service mindsets as they seek to retool for their next stage of growth.

Referrals remain the cornerstone of business development for most large RIAs, with 93% ranking them as a top organic growth strategy. However, the report notes that some firms have been able to avoid traditional marketing approaches, while others are investing in a wider array of marketing tactics to maximize their reach. On average, advisors devote only 7% of their time – roughly three hours per week in a standard 40-hour workweek – to business development.

The stakes are high: 29% of client revenue is at risk when RIAs bring in new clients through custodian referral programs, which some say come with steep costs. The report also found that 67% of billion-dollar RIA executives identify organic growth as a top strategic priority, compared with 50% who prioritize mergers and acquisitions.

As firms grow larger, they are also turning more to technology and data to drive efficiency and productivity. Sixty-one percent of billion-dollar RIAs are currently working on large-scale data projects or plan to begin one within the next two years. Artificial intelligence is also making inroads, with 70% of these firms using AI for notetaking or call documentation, and 25% using it for client engagement tracking and meeting scheduling. Half of the firms plan to implement AI for client onboarding.

Succession planning remains a looming issue. More than one-third of RIAs expect to retire within the next 10 years, yet 34% are unsure how their practice will transition, and another 33% plan to pursue an external sale. This signals a potential talent crisis for the industry if firms do not address succession and continuity planning.

“As scale becomes the goal for many firms, building thoughtful and strategic marketing capabilities will establish a solid foundation for sustainable growth,” Caruso said.