Cerulli Associates recently released its latest Cerulli Edge: Americas Asset and Wealth Management Edition. Buried within the report is a clear message for the RIA industry and an even clearer opportunity for firms willing to invest in growth.
At first glance, the industry appears healthy. RIAs posted annual asset growth of roughly 10% to 11% between 2019 and 2024.
If you take a closer look, you’ll see a different story.
Market appreciation accounted for approximately 7% to 8% of that growth. Strip that away, and organic growth falls to just 3% to 4% annually. For many firms, rising markets have disguised an underlying growth problem. Investment performance has done much of the heavy lifting while business development efforts have remained relatively unchanged.
Structural Headwinds Are Making Growth Harder
Organic growth is becoming more difficult for reasons that extend beyond marketing alone.
Cerulli reports that:
- Half of all RIA clients are aged 50 or older.
- One-quarter are over age 60.
- Fifty-six percent of projected RIA outflows in 2025 are expected to come from regular income withdrawals and one-time distributions.
- Firms lose an estimated 2% to 5% of AUM annually through natural attrition alone.
Looked at as parts of a whole, these trends mean many firms are working just to replace assets that are naturally leaving the business before generating any meaningful growth.
The Industry Knows the Problem. Most Firms Haven’t Built the Solution.
New client acquisition was identified as the industry’s biggest challenge by 57% of RIAs surveyed, yet the operational commitment to solving that challenge remains surprisingly limited.
According to Cerulli:
- Marketing expenses are expected to remain largely flat through 2027.
- Firms dedicate an average of only 5% of total expenses to marketing.
- Just 14% employ a dedicated marketing professional.
- Advisors spend only 7% of their time prospecting for new clients and another 6% on practice management activities such as marketing and business planning.
Cerulli summarized the issue:
“A lack of a repeatable, focused business development strategy can leave many firms at the mercy of the personal efforts of their founding partners.”
For many RIAs, growth is still dependent on the founder rather than supported by a repeatable business development system.
Referrals Are Driving Growth, But Few Firms Have a Process
Referrals remain the dominant source of new business, accounting for 74% of all new client acquisition.
Despite that, most firms still treat referrals as something that happens naturally instead of something they actively manage.
Cerulli found that:
- Only half of RIAs proactively ask existing clients for referrals.
- Just one in five plans to implement a formal referral process.
Stephen Caruso, Director of Wealth Management at Cerulli, noted that firms should be building structured referral workflows while also strengthening brand awareness, clearly defining their ideal client, and expanding centers of influence.
Those are practical, repeatable growth strategies. Yet most firms have yet to fully embrace them.
The Opportunity Is Bigger Than the Challenge
When viewed together, the data paints a compelling picture. The industry manages trillions of dollars in assets. Firms consistently identify new client acquisition as their biggest challenge, yet marketing investment remains modest, referral programs are largely informal, and most advisors dedicate very little time to business development.
Cerulli also predicts firms will increasingly separate business development from advisory work by creating dedicated business development roles that allow advisors to remain focused on serving clients. That shift is coming. The firms that build those capabilities before they become standard will likely have an advantage.
For firms that already have a structured marketing strategy, a defined business development process, and a repeatable approach to generating demand, this isn’t simply an opportunity to improve performance.
It’s an opportunity to compete in an environment where many firms have acknowledged they are not yet built for sustainable growth. The question now is which firms will be prepared to capture the opportunity.