The RIA industry is more competitive than ever, so what sets the fastest-growing RIAs apart?
Financial advice platform SmartAsset analyzed SEC data from more than 1,700 RIAs headquartered in the U.S. with at least $500 million in assets to answer that question. Firms that underwent a merger or acquisition between 2020 and today were excluded from SmartAsset’s analysis.
“We wanted to identify organic growth only because when firms merge with each other, all of a sudden, they have a lot more resources to work with so it makes sense that there’s an artificial jump in client accounts and assets under management under those circumstances. The effects of a merger or acquisition may be felt for 3 years after,” SmartAssets’ managing editor of economic analysis Jaclyn DeJohn told RIA Intel.
According to the report, the top 100 fastest growing RIAs increased their client accounts by 52 percent in the last year. These RIAs also grew their AUM by an average of 25 percent year-over-year, higher than the 14.8 percent overall five-year compound annual growth rate (CAGR) for RIAs in 2021, according to Cerulli Associates.
Prowell Financial Management, Align Impact, Shade Tree Advisors, Third Lake Partners, PCA Investment Advisor Services, and Nicolet Wealth Management more than doubled their AUM in the last year.
Prowell Financial Management saw almost 500 percent AUM growth between 2022 and 2023 and had one of the highest one-year growth rates of any firm in the country. It ranked 31st for overall growth.
The top five RIAs included Shade Tree Advisors, Fiduciary Alliance, Ignite Planners, Align Impact, and Facet.
While the reasons for organic growth varied, many of the top firms focused on high-net-worth clients and invested in new technology.
Overall, the top 100 RIAs’ client bases and AUM have more than tripled since 2020, according to the new report.
Navy Federal Investment Services, the investment arm of the Navy Federal Credit Union, jumped from having 5,200 clients to nearly 52,000, said DeJohn.
According to the report, in 2022, Navy Federal rolled out a digital tool that allowed investors to manage their portfolios and enroll in automated management. DeJohn said it was an interesting case study of how technology could be applied to help RIAs grow their client base.
Firms of all sizes need to understand their competition.
“There’s definitely a lot of lessons to be learned from the successes here. I don’t think financial advisors should write themselves off based on the size of these firms,” said DeJohn. “While growth is a general goal of a lot of the marketing campaigns that these larger firms implement in the business, they don’t necessarily know what’s going to stick so seeing the trends among these firms and their successes can still be useful to smaller firms.”
Since the early 2000s, the number of SEC-registered investment advisors has more than doubled to 15,000, according to the Investment Adviser Association.
RIAs collectively manage more than $100 trillion and control about 27 percent of all industry assets. However, in recent years assets have become consolidated at some of the largest RIAs with 258 firms with at least $10 billion in assets under management controlling 47.4 percent of all assets.
