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2026.09.29 | TB | Financials | RIA Sector Update: Growth & AI

原标题：RIA Sector Update – Organic Growth, Consolidation & AI Impacting Financial Advice

#financials

Third Bridge · 2026-09-29

Analyst-led • 22 Sep 2026

Andy Burgess (AB) Fractional Chief Strategy Officer at Vista Finance LLC

Jacob Zuller (JZ) — Third Bridge Sector Analyst

Agenda

Key Insights

Introduction

JZ [00:00:03]: Welcome to Third Bridge's Interview entitled RIA Sector Update – Organic Growth, Consolidation & AI Impacting Financial Advice. I am Jacob Zuller, and I'll be hosting today's Interview. I'm here with Andy Burgess, former VP, M&A Partner Development at Mercer Global Advisors.

Andy, before we get started today, please state I agree or I disagree to the following statement: You understand the definition of material non-public information and agree not to disclose any such information, or any other information which is confidential, during this Interview.

AB [00:00:34]: I agree.

JZ [00:00:36]: Could you begin with a brief introduction to your background?

AB [00:00:41]: I've spent the last 27 years in the financial services business, really focused on the registered investment advisory market. I've had a number of roles over the course of those 27 years, beginning in technology, working with services that support advisors and then working into relationship management at a custodian, as well as business development in creating new RIAs with advisors looking to leave their captive environment. Then I moved on to roles typically in a sales or advisor consulting with a variety of firms. As you said, most recently, I was working for Mercer Advisors doing partner development, which really meant finding registered investment advisor firms that met their criteria for purchase and then guiding them everything from the first phone call through close.

Questions

00:01:44] How are you seeing the RIA [registered investment advisor] M&A and consolidation environment right now? Where do you think it goes from here?

AB [00:01:56]: I would say right now, the word I would use for the M&A environment is very frothy because we've got a big demographic challenge in the industry. Right now, there's approximately 15,000 RIAs over USD 100m in America right now. The average age, I think, is tending around 58 years old, if my data is not too old there, but from a demographic perspective, there's a lot of these small businesses that are looking for either internal succession, external succession through M&A. I see that increasing over time.

The other factor that is really influencing this is private equity has taken a strong interest in our industry, primarily, I think, because the industry has very steady or recurring revenue with the way most RIAs charge their clients and the services they provide. With PE coming into the marketplace, I think that's had an effect of increasing valuations as competition arises. We're seeing a lot of large national firms like my former one, that are reaping the benefits of that through acquiring a lot of these firms that are looking to solve that problem.

00:03:29] How are you seeing valuations and EBITDA multiples trending amid the frothy environment – the average RIA age being 58, as you noted? Do you expect the multiples to remain stable or increase, given some of the trends that you discussed?

AB [00:03:51]: I think for now, all the factors that are leading to this inside the industry tell me that this will continue for quite some time. I think the X factor in all of this is going to be interest rates and what's going on in the country right now and a lot of the chatter around bonds and yields and things like that. I do think there's some risk there as if the cost of capital increases, we'll start to see not necessarily a pullback in the market, but I think people are going to become more discerning in the firms that they want to buy.

JZ [00:04:33]: Where do you currently see EBITDA multiples in that scenario? Do you see them remaining stable and just slowing down the overall number of acquisitions and consolidation?

AB [00:04:54]: I think the multiples will probably, for at least for the time being, stay where they are now, but I think as firms are starting to look at sellers, that's where I think that discernment. A big part of this movement in M&A is really around growth, and you can solve for growth through acquisition. You can also solve for growth through organic. What I've noticed in the conversations I've had with my peers in the industry that we're all seeing these different types of deals. We're not seeing a significant change in the multiples, but there's probably a closer look at what are the growth capabilities of the firms they're acquiring. The multiples, the numbers get thrown around in the press quite a bit. A lot of times, those multiples are more a reflection of the firm being purchased vs what is probably realistic. I think you bring up a good point by talking about EBITDA. A lot of firms out there, they're even on the smaller end, not even doing EBITDA because the nature of the firm is that it's generally not even large enough to probably have a true EBITDA number. We're talking more like practices where the principal owner or the advisor of the firm is probably not investing as much as they should in the business. It could be a very high-margin business.

If the current owner of the firm has not reinvested back in the business, they're going to probably get a lower multiple. Typically, what we're seeing in that, call it, sub-USD 250m, it's really a multiple of top line revenue. Of course, they're doing the math and trying to come up with an EBITDA number, but in those smaller deals, I have seen where it's more of a top line revenue number. Then obviously, as the firm grows, they have more staff, they have more systems, things that could be additive to the purchasing firm. Those are the firms that are probably going to command higher multiples and have the true EBITDA number that you read in the press every day.

00:07:32] What makes an acquisition attractive? What are some decision factors across AUM [assets under management], organic growth and advisory assets?

AB [00:07:51]: I think there's a lot to talk about there as far as what makes a firm attractive, because it's really in the eye of the beholder or the buyer and what they're trying to solve for. There are some firms going out there and acquiring advisors that have certain capabilities like you hear a lot about tax. I think firms that either were born out of a CPA firm or have some sort of tax capabilities, those seem to be more attractive to large acquirers these days. Other factors that go into there is the complexity and the operational structure of the RIA. For this, I'm talking about larger RIAs. At the end of the day, everyone is trying to capture and keep those clients. Having a deeper bench of second-generation or third-generation advisors on team that have some runway as far as their careers are concerned, also increase attractiveness and potentially mergers, but with that comes some challenges depending on the structure of that RIA and who technically owns the client. A lot of RIA firms run where each advisor has their own book, so to speak, where it's their set of clients.

Then some firms are more, they're clients of the firm. There may be a primary advisor, but the client is very comfortable talking to anybody in the firm. They don't feel like their sole point of contact is that main advisor. That could create differences in multiples, as well as the qualitative appeal of purchasing that firm. It's very good to have a deep bench of talented people there, but it's also important to really have clear definitions around who owns the client. For example, the model for many years in the RIA world was you started a firm, you started adding advisors. Some of those advisors may come in with their own book of clients if they've left a broker-dealer to join the RIA or a wirehouse, that sort of thing. The nature of that arrangement becomes very, very important because a lot of times, there's a main seller, the principal of the parent firm that's selling. Usually, they have a shorter timeframe ahead of them. That's part of why they're doing this transaction. Buyers are really looking for that continuity of care so that the asset that they're buying actually stays with them.

00:11:00] Are we seeing an uptick in structuring clients to be company- vs advisor-owned? How do you see that shift over time and the impacts that we've seen due to consolidation?

AB [00:11:19]: Yes, I do. In my personal consulting business and working with advisors, it's one of the things that I encourage them to think about because from what I've seen from working inside firms with PE ownership, the appeal of a centralised ownership vs being assigned out to each advisor where it looks and feels from a compensation standpoint that that is that advisor's book of business, there's a fear of the advisors leaving. Now the flip side of that for owners in the firm is that when the clients are clients of the firm, both legally from a contractual standpoint as well as from a client experience standpoint, I suspect and have seen that those types of firms get a better valuation.

00:12:28] What do you think are the differences between being an RIA aggregator and an integrator? Does one model look better moving forwards?

AB [00:12:44]: Again, yes, and that's what I was alluding to as far as talking about these business models is that from a valuation perspective, integration is more valuable, because at least contractually, it appears that the clients are owned by that firm that is selling there. Integration is very appealing from an equity ownership perspective. The challenge is that this industry is made up of people that have told large companies that, "No, I can do it better myself." It's a tougher pill for the advisor to swallow. You see a lot of growth in those aggregators, and it's because there's an implied and a real freedom of basically running your own business inside that aggregator model. For the advisor that's not likely to sell anytime soon, that's much more appealing than being integrated.

Another challenge from the advisor's perspective of integration is usually that means moving to more of a W-2 comp than a 1099 revenue-based comp. The 1099 revenue-based comp is the way the industry has been really pretty much for my entire career in one shape, form or the other. What I've seen as these large national aggregators are coming on board, they are helping the industry shift from that old model to a W-2 model. Now you may ask, why would an advisor do that? They make maybe more revenue in a 1099 model or at least have more line of sight or clarity into their revenue in that. That's all very much true, but when you're selling to a large integrator firm, the math there is it may be, at least in my opinion, less sexy numbers from a W-2 base and bonus-type arrangement, but the lift typically involved with acquiring equity in the parent firm that purchases should outweigh any revenue give up, assuming that that parent acquirer is growing both organically and inorganically.

00:15:36] How long do you see it taking to integrate acquisitions? What do you see as the benefits for the advisor and the potential challenges in doing that?

AB [00:15:52]: The first benefit for the advisor, a lot of them have been doing this on their own for a very long time, and they've been constrained by the resources of their large firms. The immediate lift a lot of times for the advisor and the advisor's team and their clients is that the acquiring firm has more resources and may be able to offer services that the advisor probably did more ancillary than as part of their offering. In those cases, I'm thinking of things like tax. I'm thinking about things like estate planning. I'm thinking about things like insurance, where the large aggregator can almost overnight bring additional client benefit through that acquisition, but as you're indicating in the question, there is a time that it takes to integrate them into it. That goes into the earlier questions about what people are looking at in sellers, that's where technology comes into play. Are they using the same types of systems? Are they using the same custodians? If those boxes start getting checked, the integration timeline can be shortened.

The other factors that come into integration is generally one of the early ones is pricing. If the parent firm charges more or less than the previous firm, generally, you want to leave some runway. Nobody wants to change pricing overnight for clients, especially if it's going up, but assuming that this is a good deal for both parties involved and the services and experience is getting better, that conversation becomes easier over time. It's not something you do on day one. Sometimes it's day 366, or I've seen integrators take a case-by-case basis, but due to various regulations in the industry, people need to normalise that fee across their clients so that it doesn't appear to be out of line with what they're charging their clients in general. That's some of the early system.

Some of the other benefits of the integration come into for the advisor staff. If you're working for a USD 500m RIA, maybe it's a team of 10-15 people start from principals down through client service and operations, in those types of businesses, they're great jobs, they're great careers, but from a career path, there's probably limited mobility available. You might be able to move up from a client service person to a paraplanner, but that doesn't reduce the need for that client service person. In theory or in execution, a large aggregator should be able to provide opportunities for career growth for that advisor staff, whether that's an acquirer they're of the size where they have their own investment management division, their own financial planning division, their own estate division, where people can have opportunities to expand their skill set because it's a much larger organisation.

00:19:33] How sticky do you see advisors and clients being after an acquisition and across the aggregator vs integrator model? What shifts do you see?

AB [00:19:52]: Client retention is obviously top of mind of everyone. In my experience, I haven't really seen a lot of attrition. It's very similar to when an advisor leaves a wirehouse or a broker-dealer to become an RIA. Historically, what I've seen in my career when I was doing that is retention levels in the mid-to-high 90s across the board, because in general, the clients do trust that advisor, do want to continue working with them. That's why the integration and the moves around pricing and client experience, portals, things like that, the good acquirers are very thoughtful about their approach to that so that they're not disrupting the client too much.

This also goes back to your earlier question around what makes it appealing as far as buying someone. If the clients are all tied to one individual or their value prop with that firm is that individual's knowledge like he's the next Warren Buffett, he's very good at picking stocks. That could become an acquisition that becomes less appealing because it's a harder lift of getting those clients used to a team-based approach or a more corporate resource-driven approach vs this is my guy or gal that I've known for a long time. Your question hits on all the questions we've talked about so far and why all these moving parts are so important to be planned out and really well thought out and how you approach it.

00:21:56] How much of an impact do you see AI having on financial advisors? How does AI impact integrators vs aggregators?

AB [00:22:06]: I don't think as far as AI, it's at the point where it's going to affect aggregators vs integrators. What I'm seeing in the AI space is it's a very tentative approach if you look at the masses. There are certain firms that are diving in deeper and creating partnerships with firms like Claude or looking for enterprise-type relationships, but they typically are the larger firms that have the resources to do that. Then you see things like the custodians, like Altruist that released their Hazel product that caught a lot of attention and seems to be a very interesting play. Then just most recently, I think Schwab and maybe LPL, I can't remember. Schwab for sure, have partnered up with Anthropic to provide AI services, but in practice, with the advisors that I talk to, they haven't really dived deep yet. It's really more around note-taking, looking for process improvements. I think it's going to help deliver… If you have materials to deliver to the client, I think AI is a really interesting use case there to make custom materials for your clients vs going to the in-the-box fintech solution of, here are the six reports that are available in this reporting system.

There's an opportunity there for advisors to elevate their game and make their interactions with their clients feel more custom, combining the AI note-taking with the data that the advisor has about the client and creating more of a custom experience. I really don't see it as a threat to financial advisors themselves for all of those reasons why I told you retention levels stay relatively high as advisors move from place to place is because they have their gal. They have their guy. They have their person that they've spent this time with. I think clients are loath to try to start over again with another advisor. It's that personal relationship, that person that can talk to them. Me, myself, I am a client of an advisor, and I truly value the human interaction with that. We may see some generational shifts as the millennials come up, the next couple of generations come up, but at the end of the day, I think our financial system is complex enough that it really does warrant having somebody you can talk to.

Now where I do see threats to the RIA business is that it's part of the appeal of PE coming in, is that a lot of times people talk about fee compression. They've been talking about fee compression since I got into the business. I think where fee compression is going to come is not necessarily from AI doing this, but the next generations of advisors who aren't married to the 1% AUM model, who are open to different ideas around how to charge fee and what is a fair fee for this investment advice. I think there's a trap there, or there's an opportunity depending on which direction you're coming from on it. I think that actually causes me a little bit more concern than AI, especially with these large aggregators buying up these firms with the assumption, or aggregators, integrators, I should just say, acquirers with the assumption that, "We're going to be able to continue to charge 1% or whatever their blended rate is ongoing." I think new models coming out that we're seeing in the RIA industry that may be using AI and thus maybe approach pricing from a different perspective than a basis point calculation. I think that is where it's more of a combination of AI and a new model that could cause some fee compression and thus some challenges from valuations. You can see how that may play out.

00:27:17] Could you talk about the potential pricing shift we could see? What are some potential scenarios? What might be the pros and cons? Is it just shifting back to a commission-type model?

AB [00:27:43]: I've been seeing some interesting… This is typically younger advisors coming into the business that I have the opportunity sometimes to counsel. Most of them don't talk the same way about fees that the previous generation that I grew up working with. They are thinking more egalitarian and thinking about flat fees. I've seen some firms in the industry, some very successful firms start exploring that. I'm not going to name specific names, but I'm aware of at least a firm that has figured out that really what their true cost of serving those clients are and have generated a fee of, let's say, it's USD 5,800 per year, for example, vs USD 1m account being charged 1%. I think if those models pick up, I'm not so worried about the existing clients today. They're not necessarily concerned about the fee all that much, especially if they've been working with their clients, but it's more of the next generation of potential clients, whether that's gen X/millennials that are likely more discerning in trying to understand why the advisor is charging the fee and what that fee covers.

The challenge in our industry is that this fee model is based on assets whereas the services that the advisor performs for the clients aren't always tied to those assets. I could see one day where educated consumers are sitting there going, "Why would I pay 1%? I'm not using half the stuff. I'm currently a high earner, not rich yet. I really need help with my 529s and buying my first house," whereas the older consumer is more thinking about wealth preservation, things like that, they might not be questioning because they've been with that advisor the whole time. These new clients may be attracted to somebody who has a very similar story down the road and being an RIA, being a fiduciary, being somebody that can provide all these services, if this starts catching steam where, "I can get that for a fixed fee that I can anticipate going forward." I think if that model started attracting a lot of consumers, it could put pressure on the industry.

JZ [00:30:47]: Do you think it will see traction?

AB [00:30:52]: I think there's a good chance of it. This is maybe where AI comes into play again as people are starting to do research as far as what it means and what does it mean to work with a financial advisor and what you get and if they're asking AI tools about this and the AI tools are going out and searching the web and all these different models. It's funny to say an AI has an opinion. It really doesn't. It's a machine, but it's going out and seeing these things. If the next generation of people looking for advisors are using these tools, they're going to have access to information that their predecessors didn't. I'm loath to make predictions like that, but it's something that you think about just naturally, I can see that taking off.

JZ [00:32:02]: If it were to take off, how do you see the shift coming from the RIA acquirers? How do you see their potential strategy to combat that?

AB [00:32:20]: That's a tough one. I can think of the consequences more than I can think of solutions for it. They could start segmenting their clients differently. That gets into some complexities that I think would require a deeper dive than what we have today. I think they're going to have to be aware of it. Really, what it means is that if you're charging the classic fee, you very well have a very well thought out and well-understood and well-appreciated value proposition with that client.

JZ [00:33:07]: Should they segment by client size?

AB [00:33:09]: I think all firms should be doing that, not necessarily by size, but client segmentation in general, what I was thinking more in terms of if this flat fee model takes off, or it's appealing to younger people, do you create a special offering? Do you create a special segment of, we're not landing as many gen X millennial clients, and we're hearing it's the fee. I could see smart, well-run firms looking at how do we approach that? Do we come up with something similar where it's almost like a modified version of the old, you can pay me USD 3,000 for a financial plan. I'll do the financial plan for you, give you the notebook and set you free. It's almost something like, okay, maybe what we do is we have an offering for young people, young couples, doesn't matter whatever form that takes. I could see a segmentation by where they are in their life stage, of going… Again, we talked about the HENRYs, high earners not rich yet, these various terms we've used over the years. I could see an opportunity maybe to start marketing to people by life stage vs how much money they have.

00:34:52] You mentioned earlier that a lot of AI is done by larger players – the early innings. How do you see where we are in AI's maturity cycle? How long might it be until we see some additional value-added services because of AI?

AB [00:35:16]: That's tough because right now, I think AI is just a topic du jour in the country, with data centres and threats of regulation and various things. It's really hard to predict because all of that is moving very, very quickly as we speak. I think the low-hanging fruit from an AI perspective and firms adopting it is a lot of the manual minutia of serving clients, whether that's certain processes that you had people clicking buttons for and generating reports, there are a lot of different ways of automating that through AI. Obviously, the first question every financial firm needs to address is the safety of the client information. We're in a highly regulated business that also deals with a lot of very sensitive information. I'm assuming the large firms that are adopting these tools right now are doing it within their own sandbox where they can build the walls around to protect those clients. I'm a little sceptical about firms saying, "We're now providing this AI tool to all your advisors." I'm not sure that the average advisor knows what to do with it when they have it. I haven't heard a whole lot of different use cases of going, "We've flipped it on, now advisors can use this tool."

I haven't heard many anecdotes about how they're using it, whether it's research, information, looking for different ideas, but I would think in theory, you could actually load up into an AI tool, a lot of financial planning topics, a lot of different fact-based data points that you could then use to query the AI. "Hey, I've met with John Doe and his family, and we're doing this," and then combining that meeting resource where, maybe he said something or his wife said something that the advisor didn't pick up that the tool then could go and say, "Wait a minute, John talked about having a large position in his IRA, I see you didn't talk about Roth conversions or converting over assets." What financial planning tools for decades, it's been reliant on the advisor's head and experience in doing that. I think there could be some opportunities there where it's the advisor plus this tool where they surface financial planning concepts that may not naturally occur to the advisor in the moment.

00:38:38] One thing that comes to mind is the ageing demographic of advisors. How are you thinking about the actual utilisation of technology in general for advisors? How much of an impact could AI have with using technology, or do you still see challenges with advisors using technology?

AB [00:39:08]: Technology has been a big player in this space for a long time. I got into the business early in my career representing a portfolio management system or reporting system. I think in general, advisors have been more comfortable probably than the widget factory owner or other small businesses out there in order to scale their businesses going all the way back to the first tech bubble in 1999, advisors were adopting technology as it came out. We've been very fortunate in this industry that there's been a lot of fintech providers that have grown up. It's its own cottage industry within the RIA industry. I don't worry so much from an advisor being afraid of technology or not using technology. I think everyone gripes when technology changes, but it's like the Ibbotson chart, there's ups and downs, but when you take the step back and look at it over time. It's a natural upward swing of benefit from adopting that technology. I think probably where it comes up more is maybe in that M&A where a former principal of an RIA who is making those own decisions themselves, I did see some rub in, I always think of financial planning software.

There's a handful of different providers out there, and you'll talk like some love this one, some love that one. There's not really necessarily a consensus of this one is better than that. It almost becomes, I don't want to say tribal, but almost like, I'm a Steelers guy, you're a Patriots guy between software. Is it really lack of capability or anything like that, or is it what you're used to? I think this industry has been evolving so much over the last 20 years that everyone is used to this constant state of change that I don't really see the demographics affecting that adoption.

00:41:44] You talked about room for automating some manual processes. Is there a way to contextualise how much you see getting automated? How much cost savings and efficiencies could AI bring?

AB [00:42:01]: It's as simple as time, where as these businesses grow and they get more complex and you have different custodians and you have different systems that all need to talk to each other, I think there's an opportunity with AI to say, "Rather than living in one of these systems, why don't we just pull all our data and make…" I'm vastly oversimplifying this, but just to get the concept across of going, "We have all this data and these disparate systems, why don't we bring it all together? We find somebody smart enough to help us get this into a database structure. What insights and opportunities can AI do this?" Rather than my client service specialists running down all these data points in these various systems and trying to fill out the custodial paperwork, which has come a long way, with DocuSign and various portals and systems for reuse, but what can we do to get that information from the client meeting into the database, into the, quote, unquote – paperwork – and that's becoming a misnomer. Who touches paper much anymore? It's a lot of online, but it's really filling out those data points. That used to be why you had to hire multiple client service specialists. Why? Because you needed someone to do that work. That's to say we're eliminating those jobs. There's still a place for it.

I think what we're going to do is you're going to take people from spending a lot of time in these systems and data and paperwork and freeing them up to have time to be additional relationship people to the clients, which if I was running an RIA, that would be very appealing to me because I know that my very good client service person might be developing a relationship with one of the spouses that, to stick with a stereotype, maybe I'm talking to the main breadwinner the most, but I don't have this tight of a relationship with the spouse, or are there opportunities for us to start engaging the next generation of my client, their families. This dovetails into elevating people in their roles to where it might be nice. If my client is 80 years old and their children are in their 40s or 50s or possibly younger in the next generation, who on my staff might resonate with those people more if I'm closer to age in my first client. That's where I see some interesting opportunities. It's not an immediate ROI overnight, but with incremental changes and exploring these options, I could see one day where most people within an RIA firm are client-facing, which I think increases the stickiness of the clients getting back to what I was saying earlier about people still want to talk to people.

00:45:44] How much time do you see being client-facing? Anthropic noted one-sixth of advisor time being client-facing with its partnership with all large advisor firms. What do you see technology and AI driving that to for advisors?

AB [00:46:06]: I think it would increase it dramatically. I haven't really looked at the data, I can't spout it off like I did earlier on some of the other stats, but if you do look at Kitces and some of the work that others have done around where advisors spend time and where the most value is, it's in the client interaction. We saw this with portfolio construction over the last 27 years, where at first, it was, I was the best guy at picking Coke over Pepsi. Okay, maybe you start adopting mutual funds, then ETFs come out, model portfolios come out, managed accounts. What it did was it taken that advisor from spending all his time on portfolio construction and managing the portfolio and moving into things like financial planning, estate and how we got to where we are today, maybe the same thing could happen with AI and some of these operational roles in the firm where, maybe I'm an ops client service person where I'm spending 80% of my time just running down things for the advisor to talk about in the meeting. Maybe those people could become slightly business development or marketing or anything that feeds growth because growth is probably the biggest challenge in the industry.

The stats you see out there is on average, I think Schwab did the study where it's 2-3% growth per year. That's a scary low number, especially if the financial plan calls for the client to start withdrawing at 4% or 5% per year as they go into the decumulation stage, that advisor is actually losing ground every day if the touch points for an RIA with the community and the clients and the clients becoming centres of influence. The more people you have talking and engaging with them, the more opportunities you can provide. If that client service person who spent 80% of their time doing paperwork is now spending 40-50% of their time still doing some of that work or checking the work of the AI, and now they can sit there and spend an extra 30 minutes with somebody they call just to get a wire instruction or whatever it is that they're reaching them out to, to deepen that client relationship, I think exciting things could happen with that.

00:49:08] What growth acceleration could we see? Do you see what you just mentioned driving that 2-3% growth number to higher single digits and potentially double digits?

AB [00:49:24]: Yes, maybe it's more higher single digits. You've got to walk before you run. Where I think that capacity comes from, again, is the time given back, but the biggest challenge is, does the advisor know what to do at that time? A lot of times, when an advisor is looking to join particularly an aggregator platform, the equation is, you can certainly go and start your own RIA and create your own business, or for a fee, you can outsource back office compliance technology to us for a fee for that. Now what we'd see is that let's say, the equation is, you get the same benefit of going RIA, but for 40% of your time vs 90% of your time. What I've seen historically is even by giving that time back to the advisor, the challenge is do they know what to do with it? They should be focusing on growth, but do they have the skills necessary for that. If they don't, they can hire for it, they can learn those skills. It would allow an advisor in theory, who might cap out at 100 clients with USD 1m each, might be able to get to 150 clients or 200 clients because that they're able to spend more time with more clients than they could when they were doing all this other work.

Where you hear my hedge or my hesitancy is, or at least maybe even some scepticism is people who have naturally grown just because they do a good job by their clients, and so they get very good referrals. I'd say that's the most of the advisors out there growing at 2-3%. They're growing that way, not due to discipline but because they do a good job. Now they can do a good job for more people, that should naturally lead to increase in growth just there. Then if you get somebody who has some aptitude for sales and growth, I think that type of person could be really empowered.

00:52:14] How are you thinking about the demand for independence? How are you seeing wirehouses pushing back with offering more flexibility services? How do you see that shifting over time?

AB [00:52:33]: There's a couple of thoughts there. I don't think it's going away anytime soon because the type of person who breaks away will probably always break away, meaning that the ones that I've worked with over the decades, a lot of times when you're having those first phone calls, you're trying to get a sense of their entrepreneurial spirit. There's always going to be entrepreneurial-minded advisors out there. When they learn of the advantages of going and controlling the business because really going RIA is about control, having control over pretty much every aspect of your client and business experience, that's very appealing to people that are wired that way. I don't see that stopping anytime soon because those people are always going to exist and maybe they go and cut their teeth inside a large firm, really learn how to be a great practitioner and then take that entrepreneurial spirit to go independent. I don't think that will stop. What I think will be an interesting maybe new wave is those acquirers out there that aren't doing the things I was talking about earlier and creating opportunity for those second-generation advisors and participation financially and the overall growth of the firm that they're contributing to.

There could be a second breakaway movement where the large national RIAs, when you start looking at them compared to the classic wirehouse or broker-dealer model, they start feeling and looking the same from a bureaucracy perspective, or from a lack of control perspective. Assuming that that second generation isn't completely locked up contractually from a client perspective, we could see another breakaway movement from these large national firms. I think the good news for these large national firms is that they know this and they see it because a lot of them were built by people like that. I think they're being very thoughtful about it's, quote, unquote – sharing the wealth – and being that, "We really need to make this firm still feel like an RIA, even though we're 1,500 people and USD 200bn, the culture or the experience still needs to have some of that scrappy feel of what really made this RIA industry fun and very appealing to people."

00:56:08] As RIA aggregators look to integrate more, do you see it being less attractive to go independent, or do you see a natural evolution of not going to integrators and just breaking away and becoming independent in a different way?

AB [00:56:32]: I think more of the latter than the former. I think because they always still have the option, today, an advisor with USD 50m, which when I got in the business was a decent number and now people roll their eyes at it, but you could register with the state, get up and running. If you have USD 50m, you should be able to generate at least USD 350,000-400,000 in profit or revenue for that firm. There's always going to be that option. I don't see that door closing, which I think is healthy for the industry because we need new players coming in. I think the danger to the RIA industry is as this consolidation happens, do we start looking more like the broker-dealer business, but just in an RIA form, just like we saw all the consolidation, whether it's the Osaic, the Cetera, the LPLs, the various broker-dealers, I feel like when I got in the business, there was 1,000 broker-dealers and now it feels like there's 20 from various options out there. I think that's the risk the RIA industry has as these large RIAs grow and grow, it goes to my entrepreneurial comment about the breakaway. Those entrepreneurs are always going to be there. They may be inside those RIAs, which then leads to that second breakaway movement maybe from the large RIAs that I talked about earlier.

JZ [00:58:26]: Let me close by saying thank you for taking the time, and have a good rest of your day.

AB [00:58:34]: You too, sir. It was nice to meet you.

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