Published on wealthsolutionsreport.com on 7/21/2025 | Authored by Larry Roth

Why RIAs Have Replaced Broker-Dealers As The Darlings Of M&A

Experts From Merchant, DeVoe, Integrated, Alaris And Bridgemark Discuss Private Equity’s Shift To RIAs

Larry Roth

4th Week Of July, 2025

4 minute read

Larry Roth, CEO, Wealth Solutions Report

The wealth management industry has experienced a wave of consolidation over the past decade or so, driven by investors hungry for growth and reliable cash flows.

But on closer inspection, the M&A activity can be divided into two distinct waves of dealmaking, one that appears to be far into running its course and another that’s gathering steam.

Independent broker-dealers have been so consolidated at this point that the space is almost unrecognizable compared to 13 years ago. In 2012, the top five broker-dealers controlled 47% of total revenues. In 2025, the top five broker-dealers, which changed tremendously, accounted for an astounding 72% of total revenues. Three firms have driven much of this consolidation: LPL Financial, Osaic and Cetera Financial Group.

With less consolidation available in the broker-dealer space, the M&A engine, driven by private equity dollars, is increasingly targeting RIAs, in large part because the RIA space is still highly fragmented and thus ripe for consolidation. Of the 17,000 retail RIAs that operate today, 80% manage less than $250 million in assets under management (AUM).

But fragmentation is the not only reason why private equity is favoring RIAs over broker-dealers. The RIA model, with its emphasis on entrepreneurship, innovation and speed, offers more growth opportunities versus broker-dealers.

As a result, RIAs are consolidating at a historic pace. For the first half of this year, the industry has witnessed 148 transactions, an all-time high for the first six months of a year and a 17% jump over the same period in 2024, according to DeVoe & Company.

M&A activity for RIAs is accelerating despite volatile equity markets, unpredictable interest rate expectations and extreme global geopolitical events, the report said.

Broker-dealers still experience consolidation. But when it comes to M&A activity, RIAs clearly have the wind at their back.

Why Private Equity Prefers RIAs Over Broker-Dealers

“Independent RIAs differentiate themselves through personalized experiences and cutting-edge solutions that larger, more institutionalized broker-dealers struggle to deliver,” said Andree Mohr, President at Integrated Partners. “Unlike traditional broker-dealers, RIAs have streamlined decision-making processes, enabling them to adapt to market trends and execute strategic initiatives with speed and precision.”

“The RIA model also offers multiple monetization avenues, with fee-based planning and advisory services delivering recurring revenue and higher margins,” she said.

“Additionally, the RIA space is generally ahead in leveraging technology to streamline operations, personalize client engagement and enhance advisor productivity—further strengthening enterprise value.”

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Jacqueline Martinez, Managing Partner at Alaris Acquisitions, said that RIAs are more attractive to private equity because they have stronger margins, recurring revenue and bear a lower regulatory burden than broker-dealers.

She pointed out that the RIA space is more fragmented than the broker-dealer space, providing efficiencies for roll-ups by centralizing functions. Also, the fee-based revenue of RIAs is more stable and less regulated than the commission-based revenue of broker-dealers.

“The broker-dealer model entails more rules and restrictions,” Martinez said, due to double regulation by FINRA and the SEC. “The simpler, more scalable structure of RIAs makes them a more attractive play for private equity investors looking for long-term growth and operational efficiency.”

Mohr added, “RIAs are platforms poised for innovation and national scale making them very attractive investment opportunities.”

https://wealthsolutionsreport.com/2025/07/21/why-rias-have-replaced-broker-dealers-as-the-darlings-of-ma/