Increased Competition among Private Equity Firms in the Realm of Registered Investment Advisors (RIAs)
The Registered Investment Advisor (RIA) ecosystem is experiencing a surge in private equity (PE) investment, characterised by increased M&A activity, growing competition, and expanding strategic opportunities for growth and scalability. This trend is driven by the maturation of the RIA sector, which now comprises over 18,000 firms focused on retail investors, and a market of over 1,800 registered advisory firms that represent attractive investment targets.
Key trends shaping PE investment and the RIA sector include record-breaking M&A volumes, increased PE participation across firm sizes, competitive bidding, premium valuations, and broader strategic mandates. Q2 2025 marked a record pace in RIA mergers and acquisitions, with 102 transactions closed and 2025 on track to exceed prior annual deal counts. This robust activity is driven by strategic consolidators and platform RIAs seeking scale, motivated by factors such as compliance cost pressures, technology needs, and generational wealth transfer.
PE interest is expanding beyond top-tier RIAs, engaging mid-size and smaller firms as well to unlock growth potential and gain access to distribution channels. Intense competition among PE investors has led to bidding wars for high-growth RIAs. Despite recent market volatility and higher interest rates, valuations have held strong due to the sector's growth prospects and defensible business models.
PE firms are leveraging investments in RIAs to build wealth management platforms, capitalise on technology advancements, and extend reach into new geographic and client segments globally. The diverse acquirer landscape includes not only PE firms but also independent buyers and public wealth managers, demonstrating that private equity is a major but not exclusive driver of consolidation and competition in the RIA space.
These trends are fuelling consolidation, fostering innovation, and intensifying competition within the RIA sector, driving faster growth and scale for firms able to attract institutional capital or achieve strategic alignment with larger platforms. The evolving PE involvement accelerates the professionalization of RIAs, pushing the ecosystem towards a more aggregated and competitive marketplace in 2025 and beyond.
In addition, private credit is increasingly attractive as a form of nondilutive capital in the RIA channels, providing a valuable resource for growth-oriented RIAs. As firms consider the cost of capital, those seeking to retain control have an additional lever to pull as more private credit providers enter the space.
Guidance on nuanced topics becomes more pertinent for RIAs working with specialized providers ahead of acquisitions. Cerulli recommends asset managers and strategic partners make resources available to their RIA clients during the growth stage to help navigate these complexities.
As the RIA space continues to attract investment, it is clear that the landscape is changing, offering new opportunities for growth and scalability for firms willing to adapt and evolve.
- The growth in private equity (PE) investment within the Registered Investment Advisor (RIA) sector is not limited to top-tier firms, as PE interest is expanding to mid-size and smaller RIAs as well, aiming to unlock growth potential and gain access to distribution channels.
- As PE firms invest in RIAs to build wealth management platforms, they capitalize on technology advancements and extend their reach into new geographic and client segments globally, thereby fueling consolidation, fostering innovation, and intensifying competition within the RIA sector.
){kind=link}