Shannon Westhead On The Continuing Opportunity in RIA M&A Amid Industry Fragmentation

By Shannon Westhead, Director, Wealth Partners Capital Group LLC

Over the past decade, M&A activity in the RIA space has accelerated dramatically. Transaction counts have increased, capital has entered the market from a variety of sources, and a growing number of firms have explored partnership opportunities to support long-term growth.

Yet despite this surge in activity, the RIA industry remains remarkably fragmented.

That fragmentation is not a weakness of the ecosystem, it is it’s defining characteristic. And it continues to create meaningful opportunities for thoughtful partnerships between founders, advisors, and long-term capital partners.

A Highly Fragmented Industry

Even with years of consolidation activity, the majority of the RIA landscape is still made up of small and mid-sized firms.

According to Cerulli Associates, large RIAs – those managing more than $5 billion in assets – have grown to 274 firms with a five-year cumulative average growth rate exceeding15%, yet they remain a small fraction of the overall market. The overwhelming majority of firms are still well below that threshold, with 93% of all RIAs managing less than $1 billion in AUM. In comparison, the largest broker-dealers have already experienced significant consolidation over the past several decades, leaving RIAs as one of the most fragmented segments of the wealth management industry.

There’s a reason why the phrase “still in the early innings” is so commonly used to describe consolidation in the RIA space.

The Runway for Future Transactions

When we look at the broader data, the runway becomes even clearer.

According to DeVoe & Company, the cumulative number of RIA transactions over the past several years represents only a small percentage of the total addressable market. In fact, transactions from 2018 through 2023 represent roughly 19% of RIAs managing more than $100 million in assets and only about 7% of all RIAs overall.

That means the vast majority of firms have not yet participated in a transaction.

For founders who have spent decades building their businesses, that decision is understandably complex. M&A is rarely just a financial decision, it is often about legacy, culture, and ensuring continuity for clients and employees.

Because of that, many firms take years to evaluate whether a partnership is the right fit.

Why Fragmentation Persists

Fragmentation in the RIA space is driven by several structural realities.

First, new firm formation continues to outpace consolidation. According to Cerulli Associates, the total count of retail-focused RIAs grew by more than 11% in 2022 alone, driven largely by a wave of breakaway advisors leaving wirehouses and broker-dealers in search of independence and greater autonomy. Cerulli projects independent RIAs will be the fastest-growing segment of the advisory landscape through 2028, increasing headcount by approximately 12% over that period.

Second, succession planning timelines vary significantly. According to Cerulli, 37% of RIA channel advisors are expected to retire over the next decade, putting roughly 35% of channel assets in motion.

Finally, cultural alignment remains central to any successful partnership. The most durable transactions occur when founders prioritize alignment around client service, team continuity, and long-term vision – not just valuation.

Because of these factors, consolidation within the RIA industry tends to happen thoughtfully rather than rapidly.

The Role of Strategic Partners

For firms that do pursue a transaction, the right partner can provide more than capital.

Strategic partnerships often bring:                       

• Comprehensive Suite of Client Services & Operational Infrastructure

• Brand & Marketing Support
• Best-In-Class Technology 
• Access to Organic & Inorganic Growth Opportunities

• Long-Term Growth Potential, Liquidity, & Succession Planning Support

When executed well, these partnerships allow founders to maintain the values and culture that built their firms while positioning the business for long-term sustainability.

A Long-Term Perspective

The continued fragmentation of the RIA industry suggests that M&A activity will remain an important feature of the landscape for years to come.

But the most successful transactions will likely continue to be those grounded in alignment, where founders, advisors, and capital partners share a long-term commitment to clients and the growth of the business.

As the industry evolves, the opportunity is not simply to consolidate firms, but to build partnerships that strengthen the broader ecosystem of independent advice.

And in a fragmented industry built on trust and relationships, that work will continue to unfold one partnership at a time.

Shannon Westhead is a Director at Wealth Partners Capital Group, where she works with independent wealth management firms across the country on strategic partnership opportunities within the RIA landscape.

References two data sources:

1.      Cerulli Associates – cited for large RIA growth data (274 firms, 15% CAGR), new firm formation (11% growth in 2022), and advisor retirement projections (37% over the next decade). Their website is cerulli.com

2.      DeVoe & Company – cited for cumulative transaction data (19% of RIAs over $100M, 7% of all RIAs from 2018–2023). Their website is devoeandcompany.com