RIA M&A booms, but missteps after closing can derail success

M&A activity in the RIA arena continues to reach new highs. Fidelity says the first half of 2025 produced 132 transactions, totaling $182.7 billion in assets, the most transactions recorded by Fidelity since it began tracking in 2015.

As RIAs embrace these changes, early communication is critical, , says CW Advisors CEO Scott Dell’Orfano. His Boston-based $13.5 billion RIA holds a unique vantage point on M&A transitions, having made nearly 20 deals to buy firms over the past couple of years before CW was acquired by Osaic in June. 

“As soon as you know you’re going through this process, I would make sure you begin communication with your employees as to what’s happening and why,” says Dell’Orfano. “I think one mistake firms make is, they wait until they actually sign an agreement and then start to communicate.”

Dell’Orfano says CW Advisors “ended up getting almost 100 percent of our clients consenting to the transaction,” as the advisors effectively explained the new offerings for clients upon shifting under Osaic’s ownership − including non-purpose lending, a proprietary trust company, and added estate planning support.

“When we’ve acquired firms or us being acquired, the questions from the clients are always the same,” says Dell’Orfano. “Does my advisor stay the same? Yes. Do my fees stay the same? Yes. Does the management team say the same? Yes.”

CW Advisors kept its brand and now operates as a separate entity affiliated with Osaic, Dell’Orfano says. This subsidiary model is commonly used by the largest RIA aggregators and is one of four strategy models for integration, according to Phil Kerkel of the financial services consultancy Capco. Kerkel outlines the other three models as the full absorption strategy, where a larger RIA completely absorbs a smaller RIA); the best of breed, where top traits of each firm are selected to form a combined new firm; and the least common transformation approach, where the merged firms build a new business model without relying on existing infrastructure.  

“A lot of small RIAs and advisors break away from a wirehouse to start their own business and want to operate independently,” Kerkel says. “If they start getting absorbed into a much bigger business, they start feeling like it’s corporate again, and not what they were looking for in the first place. So that’s always the risk with advisors.” 

Emily Hue, co-founder of the RIA M&A advisory firm Hue Partners, finds that the early days of firms adapting to their new transaction can feel like “stepping into a change box.” 

“Suddenly, the tough conversations they postponed − discussing about integration planning, support structures, compensation grids, transition logistics, and life after the deal − become urgent,” Hue says. “Avoiding these discussions before the ink dries sets the stage for frustration, disappointment, and misalignment from the very beginning.” 

Advisors who don’t hold equity in their firm and thus miss out on the financial windfall of being acquired face heightened risk of dissatisfaction, which could result in the acquirer losing client AUM, explains 55ip’s head of client solutions Mike Camp. The tax automation fintech was acquired by J.P. Morgan Asset Management in 2020. 

“At times, depending on the size of the firm, you have to think about advisor attrition and the clients that are loyal to them,” Camp tells InvestmentNews. Sellers should be“looking to take care of their staff and properly incent them as they go through this transition to minimize client attrition.” 

The Advisors in Transition: Challenges and Best Practices report from Cerulli Associates and 55ip found approximately 10 percent of advisors anticipate transitioning their practice in 2025. The research shows advisors who switch between broker/dealer firms typically lose about 22 percent of their assets, while those who move from a B/D to an independent firm lose around 18 percent. Advisors jumping from one independent firm to another achieved the smallest loss, 11 percent of their assets on average.  

55ip is part of the tech stack for six of the 12 largest RIAs in the US, according to Camp. A leading pitfall from RIA aggregator acquisitions is the juggling of a firm’s existing model portfolios with hundreds of new ones that come from the acquiring firm. 

“I call it the Island of Misfit Toys,” says Camp. “All of a sudden the aggregator turns around and they look across their platform, and they’ve got 2,500 different model portfolios and realize ultimately the ability to maintain and scale those is very limited.” 

Eddie Rollins emphasizes the importance of “cultural fit” becoming part of the due diligence process , which goes beyond matching numbers and services. Rollins is the managing director of BridgePort Financial Solutions, a fee-only RIA advising on $2 billion in client assets since it was launched by Cambridge Investment Research in 2024. During RIA acquisitions, Rollins stresses that the seller needs to discuss career growth plans for junior level advisors to keep them engaged as next-gen leaders of the firm. 

“A lot of your next-gen advisors are establishing relationships with the retail clients. If, post-close, they’re not happy, there’s probably not anything to tie them to stay at that firm, and you could see them leave,” says Rollins. “I think, up front, the seller needs to be really communicating with their next gen as to what his or her motivation is for selling, and what’s in it for the next gen from a career standpoint.”