The RIA industry has seen tremendous growth in the last few years, moving from a small, niche industry to a major player in the financial services industry. In 2023, assets under management and the number of RIAs both hit record highs, and the number of clients grew by nearly 4% over the previous year. And it’s only up from here.
By 2027, RIAs are predicted to control nearly one-third of the intermediary market. That growth has fueled new attention and movement in the industry.
But what does this mean for new RIAs, especially in an evolving talent market? Let’s take a look at what to expect in the future of RIA talent acquisition.
Recruiting To Balance Retirement
Amid the growth, the RIA industry is in an era of transition. One of the biggest issues facing the industry is a massive amount of retirement. Nearly 40% of advisors plan to retire in the next 10 years, marking a significant change to the workforce. That’s happening as a record number of clients want to work with an advisor.
RIAs are facing a recruiting crisis, especially because the number of incoming advisors isn’t on pace to match the number who will soon retire. While it used to be that new advisors would have two or three firms to choose from, today’s jobseekers can have upward of 20 firms vying for their attention.
To stand out from the competition, RIAs have to prioritize recruiting and presenting compelling benefits and opportunities for advisors. Growth opportunities are among the biggest draws for talent, especially for advisors early in their careers. Firms that can show they are growing and provide advisors with opportunities to grow and develop have a strong advantage in attracting great talent.
Acquiring, Not Hiring
Another option for RIA firms is to acquire new talent, not necessarily by hiring but by acquiring. Merger and acquisition activity among RIA firms has been growing in recent years as smaller firms combine to create larger firms.
Research from Fidelity found that 90% of M&A buyers say their top interest in expanding is acquiring new talent. M&A is crucial for acquiring and retaining top talent because it allows firms to consolidate great talent without recruiting and starting from scratch. Creating larger firms of talented advisors can entice future advisors and new talent. As clients increasingly want a more diverse services offering, many RIA firms are looking to fill the gaps of retiring advisors with advisors who may bring unique qualifications, certifications, and experiences. M&A is one of the most effective ways to grow a firm’s offerings.
Getting new talent through M&A also creates a smoother transition for clients to move to new advisors and for firms to gain experienced RIAs and leaders. That means smaller firms with strong leadership structures and talent management are highly desirable to be acquired.
Breaking Out of the Mold
Professionals experienced in other types of advising, including tax planning, accounting, estate planning, or legal services can be desirable to firms, especially as more clients lean toward a holistic advising approach that connects their investments and financial advising with other aspects of their lives.
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