The registered investment advisor market is consolidating at a pace that shows no signs of cooling, with new research from Cerulli Associates projecting the sector will eclipse $4 trillion in assets over the next decade.
More than half (54%) of RIAs are currently seeking an acquisition, according to Cerulli's research, a share that has grown steadily as firms recognize the window of opportunity.
At the same time, RIA firms with at least $5 billion in assets under management (AUM) have increased their share of the total RIA market from 34% in 2018 to 54% in 2024.
The most significant near-term opportunity for acquirers, according to Cerulli's analysis, remains the impending wave of advisors greying out of the industry. The firm projects more than 26,000 advisor exits over the next decade representing a combined $2.508 trillion in AUM, dwarfing other acquisition opportunity categories including breakaway advisors ($783 billion) and growth-challenged RIAs ($605 billion).
"Advisor retirements remain the largest addressable market for RIA acquisitions in terms of assets under management," said Stephen Caruso, associate director at Cerulli. "On average, these retiring advisors have larger books of business than employee advisors looking to break away."
The retirement pipeline feeds directly into the broader succession planning gap that has defined the industry for years. As InvestmentNews has previously reported on advisor succession challenges, nearly 40% of advisors are expected to leave the profession in the next decade, and a significant share of those firms have no formal succession plans in place, making them natural acquisition targets for well-capitalized consolidators.
In total, Cerulli estimates $3.9 trillion in RIA acquisition AUM exists across more than 66,000 advisors, with the majority of those advisors currently residing within potential broker-dealer breakaway practices.
Not all buyers are created equal in the current M&A environment. According to Cerulli, hybrid RIAs – advisory firms that operate on both a fee basis and a commission basis – are the most acquisitive segment within the independent channel.
Breakaway acquisitions, in particular, have grown more complicated to execute in recent years. The complexity of exit strategies from captive broker-dealers has created friction for buyers attempting to acquire teams coming off wirehouse or national B/D platforms. Within that stream, Dynasty Financial got an honorable mention as it supported the $129 billion Merrill team that became OpenArc, the largest-ever breakaway into the independent RIA channel.
Cerulli segments major RIA consolidators into three tiers: major consolidators, such as Focus Partners Wealth and Hightower Advisors; emerging consolidators including Wealth Enhancement Group, Cerity Partners, Sanctuary Wealth, and CI Financial; and sub-consolidators, firms affiliated with major platforms that are conducting their own downstream acquisitions.
According to Cerulli, firms that have been acquired – or are considering acquisition – face real operational questions around technology integration, workplace culture, and long-term scalability.
While the $4 trillion projection for the RIA consolidator market over the next decade rests on sustained inorganic activity, Cerulli stresses that organic growth remains elusive for the largest firms. From 2019 to 2024, RIA firms with more than $1 billion in AUM achieved a compound annual growth rate of 11.4%, but that drops to only 3.9% when market gains are stripped out.
"Even within the highest AUM tiers, organic growth potential still can be limited in terms of net new assets coming into these already sizable billion-dollar-plus RIAs," Cerulli said. "Against this backdrop, M&A will continue to be a key storyline when it comes to industry growth and its evolution for the foreseeable future."
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