Exploring Trends and Growth for RIAs

There is a continued rise of registered investment advisor, or RIA, firms. This indicates more opportunities for advisors. 

 

Growth of Remote-based RIAs

 

There has been a steady trend away from wirehouses, which grew exponentially during the pandemic. With better technology, it has become increasingly cost-effective to do remote work or a hybrid model. This allows for a larger talent pool to source from. The trend of downsizing or even going 100% virtual means you can hire experts from completely different cities across the globe. This allows companies to go through more candidates and find the ideal one for the position. With this model, you have lesser real estate expenses and more candidates to select from. 

 

Opportunities on the Rise

 

This has been a historic year, and one of the ways history was made was through a large number of mergers and acquisitions that took place. Record highs in M&As have led to even more opportunities for advisors. 2018 saw 4.3% of firms gaining new clients via mergers and acquisitions. In the last five years, 17.9% of RIA firms have been part of acquisitions. 

 

It is a seller’s market. These recent trends have contributed to some advisers feeling like they have missed the chance, so they are now urgently investing. This, combined with a favorable market, has boosted the rise of mergers and acquisitions even further. The result is more opportunities for RIA firms and advisors. Consider that 71% of firms hired more staff in 2018. 

 

The Takeaway

 

Even with the tough year everyone has had, there is a rise of new resources, making it easier to get top service at low costs. The future is never certain, but it is very likely to see more consolidation, and with that, RIA firms will experience continued growth.