RIA Consolidators Reach $1.5T in AUM, “Redefining” Industry: Report

Registered investment advisor (RIA) consolidators have significantly expanded over the past decade, currently managing $1.5 trillion in assets, according to a new report by Cerulli Associates.

“This market opportunity has shifted the dynamics for strategic partners, asset managers, and, most notably, RIAs themselves,” the Boston-based consultancy firm wrote in The Cerulli Report—U.S. RIA Marketplace 2024.

The percentage of advisors in RIA channels associated with consolidators increased to 14% last year, up from 6% in 2018, while RIA assets linked to consolidators surged to 18% from 8%.

Cerulli’s research reveals that technology has emerged as a fundamental element of RIA consolidator offerings to prospective advisors and the practices they intend to acquire. Findings indicate that 55% of advisors consider an integrated technology platform to be one of the most valuable services provided by a consolidator.

“Fundamental to RIAs’ needs, technology tools have become a costly and complex component of advisory practices,” said Stephen Caruso, associate director. “Many consolidators have successfully constructed centralized technology platforms that give advisors access to a best-of-breed technology stack where internal technology teams manage the tools.”

Succession planning is also a critical factor for advisors assessing consolidators, particularly as 37% of advisors in the RIA channel are expected to retire over the next decade, resulting in 35% of channel assets being affected, according to the report.

Cerulli’s survey of advisors indicates that 50% regard succession planning as a highly valued service, and 74% consider succession planning or exit strategies to be a factor in their decision to join a large RIA platform or aggregator.

“As this wave of consolidation rolls across the industry, advisors will be increasingly confronted by opportunities to sell their business or affiliate with a with a large RIA acquirer,” said Caruso.