Not All RIA Consolidation Is Created Equal: Joe Duran

“For me, this is the most exciting and dynamic part of the RIA marketplace today,” Duran added. “We have the opportunity to create wonderful brands led by great entrepreneurs that can grow and attract the best advisor talent.”

Duran also discussed the growing role of private equity in RIA consolidation and rumors reported in industry news outlets to the effect that PE firms Hellman & Friedman and Warburg Pincus are considering selling the $290 billion RIA platform Edelman Financial Engines to a strategic acquirer. (Edelman declined to comment for this article.)

“Many of the big national RIAs are now controlled by private equity,” Duran said. “Many of the biggest RIAs have also become the biggest very quickly, via acquisitions. I have questions about their ability to achieve real integration, especially the firms that are spending more time and resources on acquisitions than on integrating what they’ve already brought together.”

Maintaining that RIA industry consolidation is here to stay, Duran believes that long-term success for the biggest enterprises will require both substantial scale and genuine platform integration.

Here are some highlights from our conversation, edited for length and clarity:

THINKADVISOR: How have competitive challenges changed the way that RIAs, wirehouses and other advisor channels are building their businesses and pursuing growth? In what ways are they similar, and how are they different?

JOE DURAN: There’s a lot to unpack there. I’d start by observing that a big question for any firm in this environment is to ask and answer the question: How broad of a platform do you need to have to attract and effectively serve your clients? Naturally, answering that question depends on the client base.

For example, the high-net-worth client segment — say $3 million to $10 million in assets — is still overwhelmingly being serviced by the wirehouses. They have significant resources to deploy, and they’re focused on building that one-stop-shop solution and service model that is much more appealing to HNW investors. The same is true for advisors affiliated with the major national banks, I would argue.

Your typical independent RIA, on the other hand, simply cannot do all the things that a bank or big hybrid wirehouse can do. But they do have one clear advantage in that they can do things as an RIA that the banks cannot do — things like tax prep, in-house estate planning, fiduciary advisory services, etc.

The RIAs and wirehouses can be much more flexible and amenable compared with the banks. Overall, RIAs and wirehouses probably still have the advantage on the service side, but banks still have an advantage on the product side. Where that goes in the future will be very interesting to watch, especially as greater and greater scale is achieved by RIAs.

THINKADVISOR: Can you zoom in specifically on the RIA outlook? How are consolidation and competitive trends intersecting in 2025? Do you think much about the growing role of private equity ownership?

DURAN: Yeah, the truth is that, as an RIA with serious growth ambitions, you need to be big in order to provide the necessary breadth of services. Now, there are lots of third-party vendors who you can partner with to expand your capabilities as a small or mid-sized firm, but the reality is scale allows you to invest consistently in the platform and raise the bar for clients.

Here’s where one dilemma comes up with PE. Many of the big national RIAs are currently controlled by private equity, and conventional wisdom is that they are highly incentivized to grow as fast as they can ahead of the next recapitalization. If that’s the case, you might not be able to make those big equity investments that are good for the long-term business at the expense of shorter-term profitability.

When firms get very big very quickly, there is a tug and pull between maximizing profitability and maximizing the quality and breadth of your platform via equity reinvestment and investing in true integration. I think a lot of RIA businesses that have taken on PE ownership are grappling with this balance right now.

It’s not just a PE thing, actually. Across ownership structures, some RIAs that are operating on the national stage have grown to that size through large, fast-paced acquisitions. In some cases, I fear that they are spending more time doing more acquisitions than they are spending on integrating those acquisitions and delivering a great, nationally consistent client experience.

In that respect, some of these mega-RIAs actually resemble the wirehouse’s more open-ended service model. You’ll get a different level and style of service depending on what advisor you talk to or which geography you are in.

It might sound trivial, but I do think that matters for RIAs who want to be the biggest and best over the long term. When we built United Capital, for example, we wanted one brand, one culture and one platform. I believed that was necessary if you wanted to create a firm with a real legacy and long-term value, and it’s still true today.

THINKADVISOR: Without necessarily naming names, do you see some PE firms and their RIAs doing a better job at reinvestment and building long-term value for advisors and their clients?

DURAN: Yes, I think so. You know, I would make my assessment depending on where they are investing. Are they just using their capital to get bigger as quickly as possible?

For both PE-backed firms and all other enterprises, the real test metric of their strategy is in their organic growth rate. Whatever their ownership structure, you will notice the highly integrated firms have much better organic growth than those that haven’t put in the integration work.

THINKADVISOR: What do you make of the rumors that Edelman Financial Engines could be sold by its PE owners Hellman & Friedman and Warburg Pincus to a strategic acquirer?  

DURAN: It’s a fascinating example because I would argue that Edelman actually has a model that is quite well integrated, in addition to having a growth and client acquisition strategy that is also uniquely attractive thanks to the combination of the Financial Engines business back in 2018.

To be clear, I have no inside knowledge on this whatsoever, but I agree that it will be interesting to see if the rumors about a sale are true. Who buys them, and how does their unique model and level of integration affect the multiple that a buyer would pay to acquire the business? What I know is that current owners are smart investors, and I have a lot of respect for them.

If a sale were to happen, I’m skeptical it would be a bank, simply because of the regulatory challenges of integrating something at that size and complexity. That leaves the prospect of another private equity investor, though that could also be hard to imagine as an outright sale given the size of EFE.

I could imagine an insurance company considering the acquisition, perhaps an international firm looking to gain instant exposure to the U.S. market. They generally have low costs for accessing capital, and there are aspects of the business that could be appealing for their broader distribution strategies.

Another option would be an asset management company that has already decided it wants to be more directly involved in the wealth management industry, or even a major custodian looking to evolve its distribution strategy.

Pictured: Joe Duran