The Registered Investment Advisor (RIA) aggregator market has grown significantly in recent years, with dozens of major players now active in the space. It’s estimated that the RIA aggregators currently account for more than $1.5 trillion in assets under management (AUM). Their influence over investments should only grow, as private equity and institutional capital drive expansion. Firms in this market include more common names like Dynasty Financial Partners, Focus Financial Partners, Hightower Advisors and Mercer Advisors, as well as smaller, emerging entities that focus on specific niches within the industry.
These firms operate under a wide variety of models, leaving asset management firms to consider the following for each aggregator.
- Structure: What is the firm’s structure and how are the individual firms/branches organized? Is the firm an aggregator with semi-autonomous RIA practices, an integrator of RIAs into a single entity or somewhere in between?
- Investment/Portfolio Support: Does the firm conduct manager research/due diligence, curate product lists, offer CIO guidance and produce model portfolios? If so, how big are these teams, what asset classes are covered and to what extent are advisors expected to use these services?
- Technology Support: Does the firm offer platforms and/or solutions for CRM systems, portfolio management software, financial planning tools, cybersecurity solutions, compliance and regulatory solutions, client portals and communications platforms, etc.? If so, how much flexibility is there for the advisors to use other systems and platforms?
- Financial Support: Does the firm offer acquisition capital (an integrator within an aggregator exists!), debt financing, equity investments, growth capital, succession planning/buyouts, etc.? If so, what does this mean for growth objectives and potential practice support from other sources?
The diversity in aggregator business models adds certain challenges and complexity to deciding how to best engage and allocate capital and resources to those relationships. Based on our unique relationships with distribution leadership across the asset management industry, these are the top three questions that we receive on the RIA aggregator market and some insights and opinions for answers.
- Do we cover and how should we cover aggregators with our national accounts team?
Three-quarters of asset managers responding to our annual benchmarking surveys confirmed that they cover at least one RIA aggregator by their national accounts team. Half of national accounts teams also have at least one aggregator on their “focus list.” So yes, national accounts should cover aggregators—occasionally a handful—with more rigor and capital than in prior years. We expect that asset managers will continue to increase their national account coverage to aggregators in 2025 and beyond, and will sacrifice a few more traditional relationships to do so. As this is the case, aggregators of note should be brought into the focus of firm assignment conversations along with prominent broker-dealers. Frameworks like the SS&C RADR can assist in KPI assessments to decide whether an aggregator or aggregators deserve more capital or resource coverage.
- How do we optimize field sales to cover the large and expanding aggregators?
Some 60% of asset managers support a dedicated RIA wholesaling effort, regardless of their overall sales coverage model (i.e., channelized v. de-channelized). For those firms with a dedicated RIA wholesaling team, the average team size is 9.8 FTEs according to our “Productivity Insights” research. This is not an insignificant number of FTEs, but it is still relatively small when compared against the larger wholesaling team. Our expectation is for both the number of asset managers with a dedicated RIA sales team and the number of dedicated FTEs in the field to increase in 2025 and beyond. We know from examining SS&C’s WalletShare for Mutual Funds data, that firms with a dedicated RIA team have greater RIA sales production versus those that don’t. If asset managers are serious about growth in the RIA market, a dedicated effort is warranted. As with advisor coverage more broadly, a coordinated effort between national accounts and national sales, plus a sound segmentation effort, will assist national sales leaders in assigning responsibilities and expectations with aggregators and their associated firms.
- How do we better manage relationship management and coverage with so many advisor/advisor team breakaways?
It’s estimated that 10% - 20% of financial advisors change firms in any given year. Whatever your denominator is for the total number of active FAs, it would be safe to say we’re seeing tens of thousands of advisors moving firms every year. That is a lot of movement. For asset managers in a cross-channel model, an advisor moving from one firm to another is no big deal. That relationship stays with the wholesaler unless the advisor moves geographically—but let’s not get into that now. For others in a channelized model or a cross-channel model with an RIA carve out, the breakaway advisor adds friction to coverage. (The friction can be cooler/hotter depending on which firms/channels the advisor is leaving and entering).
Our prediction is there will be continued friction, especially as the cadence of broker/dealer to RIA (or hybrid) breakaways continues and the prevalence of dedicated RIA teams expands. A disciplined handoff process with the proper incentives is key where a handoff is warranted, but a handoff is not always necessary. Here are a few industry examples that exist at more than a handful of asset managers:
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- The RIA team covers advisors/teams with $500M+ (or any specified threshold). If that advisor/team does not meet that threshold, that relationship stays at home.
- Hybrids stay at home. Only independent RIAs or RIAs associated with an aggregator get covered by the RIA wholesaling team. There are exceptions, but this is fairly common.
- Advisors/advisor teams that leave to aggregators who recruit primarily from the Wires (e.g., Rockefeller, Sanctuary, Stewart Partners, etc.) will stay with the wholesaler who previously covered them.
The RIA aggregator market is at a pivotal juncture, offering both opportunities and challenges. As aggregators continue to refine their value propositions and expand their reach, they will play an increasingly central role in the wealth management ecosystem. Asset managers need to keep a close eye on this dynamic segment and ensure resources and capital are allocated to the firms at the right levels across both the home office and the field. Our data and research can help firms ensure success in supporting this market.
