In an industry where success hinges on relationships and trust, wealth management firms must be forward-looking when building and retaining talent. Executives from leading RIAs and MFOs recently gathered to discuss future-proofing strategies at the Addepar Summit. Their consensus? Investing in the right talent is the foundation for sustainable growth and resilience.

Building a basis for long-term growth

Summit attendees shared their view of staffing as similar to a “family tree,” a foundational element that branches out to strengthen their firm at every level. Leaders highlighted that future-proofing means not only hiring skilled professionals but also hiring those eager to learn and adapt to new challenges. Curiosity, openness and the desire to innovate are shaping the next generation of RIA talent.

Succession planning emerged as a cornerstone for future growth, ensuring that firms are well-positioned to transition leadership without disruption. This continuity, they argued, makes it possible to deliver consistent client service and maintain stability. To this end, some firms have implemented retirement age policies, aligning with partner-based models in law and consulting firms. This allows for clear planning around leadership transitions, while still encouraging experienced advisors to contribute meaningfully until retirement. 

A unifying culture is essential to building a successful RIA firm

RIA leaders discussed how cultural alignment helps consolidate teams effectively, fostering a collaborative atmosphere where team members feel connected to a shared purpose. Executives underscored the importance of maintaining this cultural cohesion, whether through mentorship or targeted hiring strategies. 

The “94.5% of practices with greater than $500 million in AUM operate in a team-based structure, compared to only 5.5% that are solo practitioners.” 1

A recent Cerulli Associates report makes the case for growth as a result of building strong teams with team-based practices producing “an average of $21M in net asset inflows in 2023, compared to $8M on average for solo practice.”1 Larger RIAs are embracing the trend of teaming. According to the report, “94.5% of practices with greater than $500 million in AUM operate in a team-based structure, compared to only 5.5% that are solo practitioners.”1 

RIA leaders are exploring diverse team models, including spaghetti teams, the pool model and the Arthur Andersen approach. These models vary in structure: spaghetti teams embrace flexibility, the pool model promotes individual contribution toward shared goals, and the Arthur Andersen approach emphasizes formal structure and accountability. These models suit different business contexts depending on the need for flexibility versus defined processes and the company culture. 

Setting a course for the next two decades

As the industry adapts to an outflux of retiring advisors and an influx of younger professionals, firms face the challenge of finding and keeping new hires. RIA Edge states that “less than 40% of RIAs have a succession plan in place” and cautions against “looking for a carbon copy of themselves to take over.”2 

At the Addepar Summit, several RIA executives explored the use of AI to empower junior staffers to develop their expertise and grow their responsibilities. By leveraging technology, younger advisors can work more efficiently and avoid the monotony of repetitive tasks, fostering greater satisfaction and engagement. RIAs now look at hiring, not in terms of the next two years, but rather the next 20 – an investment in people who are not only skilled but aligned with the firm’s mission, culture and vision for the future. 

References:

  1. Team-Based Advisor Practices Are Better Positioned for Growth, Cerulli Associates, June 2024.

  2. Preparing for Succession, RIA Edge, May 2024.