Advisor M&A FOMO is Real – Hybrid RIA Groups Can Be Part of the Solution


As the Wealth Management M&A Boom Continues, Hybrid RIAs Offering Equity Ownership Can Stand Out in Attracting Independent Financial Advisors 

Through the first three quarters of this year, RIA merger-and-acquisition activity has already hit record levels, according to a new report from Devoe & Company. These findings, of course, come after the number of deals last year – and the seven years before that – also set all-time highs.

With private equity-backed aggregators continuing to gobble up firms left and right, the blistering dealmaking pace is likely to continue, even as interest rates could get a boost in the not-so-distant future.

The outsize dollar figures associated with many of these deals tend to grab most of the headlines. But it’s important to point out that only a relatively small number of RIA owners and a selected number of longtime employees are benefiting from this M&A rampage.

The Financial Advisor FOMO is Real

Increasingly, financial advisors – especially those embarking on the final 10-15 years of their careers – are suffering from FOMO:  In this case, the fear of missing out on potential future liquidity event opportunities.

Consequently, it’s time for more firms to provide independent IARs with the opportunity to acquire equity, whether it’s through grants or an option to buy shares.

Consider the following.

  • IARs are deserving. To be clear, risk-taking entrepreneurs should reap the rewards from building hyper-successful businesses. At the same time, it’s somewhat perverse that many of the independent IARs affiliated with these firms do not benefit more. After all, aren’t these the folks doing a lot of the work that makes firms attractive acquisition targets in the first place?
  • It would compel advisors to build more successful businesses. Nearly all independent advisors are motivated to build prosperous, durable businesses that transcend their careers since one of the perks of the industry is being able to monetize client relationships at retirement. However, if they have equity in a growing, profitable firm, the incentive to do well becomes even stronger.
  • Creates alignment between all stakeholders. To build on the above, when advisors know they are a part of something bigger, they will work harder on behalf of the entire firm. Naturally, the value of their shares will rise as the RIA becomes more successful. But equally important is the so-called “second bite of the apple,” with a potential liquidity event possibly translating into a huge payday. Meanwhile, this dynamic means clients will enjoy a better experience because, at the end of the day, providing excellent service is the best way to add business and boost growth.
  • Firms can attract, retain better talent. Many IARs are entering the twilight of their careers, so they want to make the most of their remaining years. In an era where large, up-front recruiting bonuses have become the norm, firms that grant or provide advisors the opportunity to purchase equity will have a powerful tool to reward top talent.

Granted, you could make the case that many IARs already benefit from M&A. Indeed, as independent advisors, they will eventually sell their book of business.

And it’s easy to argue that partnering with a larger firm increases the value of their client relationships long term since many buyers spend heavily to increase the scale and improve the service of their acquisitions, making business development an easier task.  Sign Up for Our Newsletters Still, this argument ignores how much direct influence IARs have on determining RIA valuations. Clients are the lifeblood of any firm. Most of them feel a connection to their advisor, not the firm so that their profoundly personal relationship is a huge difference-maker.

A Second “Bite at the Apple”

So, with the consolidation trends of the past few years unlikely to slow down any time soon and the number of IARs reaching retirement age continuing to rise, advisor equity should be a far more common phenomenon at this point.

Hybrid RIA groups that offer independent financial advisors the benefits of owning their books of business as well as a “second bite at the apple” in the form of additional ownership in the RIA they are affiliated with could be in pole position to attract more advisors to their platforms.

Thomas Goodson is President & CEO of The AmeriFlex Group, an independent hybrid RIA group, supporting independent financial advisors across the country with more than $4 billion in assets

# # #

If you would like more information, please contact Jesse Kurrasch at (702) 987-9732, by email at [email protected] or visit us at

Securities and investment advisory services offered through SagePoint Financial, Inc. (SPF), member FINRA/SIPC. Additional Investment advisory services offered through The AmeriFlex Group®, an Independent Registered Investment Advisor. SPF is separately owned and other entities and/or marketing names, products or services referenced here are independent of SPF. Insurance is offered independent of SPF.

8485 W Sunset Road, Suite 204, Las Vegas, NV 89113