For two decades, wealth management has viewed the growth of the RIA channel through the prism of culture. Financial service professionals, after all, began leaving big banks and brokerages for the independent model to gain greater freedom to serve their clients, pursue their entrepreneurial endeavors and live their best professional and personal lives.
Processing Content
But with the rising influx of private equity money into wealth management, many advisors are finding themselves back at square one, mulling over whether to stay in a less-than-ideal environment or pursue greener pastures elsewhere.
The number of private equity-backed RIAs rose by 16% from July 2024 to July 2025, according to research from AdvizorPro, while total AUM controlled by PE-owned RIAs climbed 14% to nearly $6 trillion, representing 23% of all RIAs with $100 million or more in assets.
Following a PE-backed acquisition, advisors must first decide whether to sign restrictive covenants, which can hamstring their ability to leave the firm.
Do they leave and join another founder-led firm, only to find themselves in a similar situation not long after? Or do they remain at their newly acquired RIA with its culturally altered, less-than-ideal environment?
READ MORE: As private equity reshapes RIAs, advisors look for alternatives
PE’s home run mindset
Here’s the truth: Private equity firms are good at making money for their investors, but terrible at building and maintaining culture in the advisory firms they acquire.
That’s because private equity investors and advisors ultimately have different financial strategies and goals. PE investors would rather strike out 10 times than make small gains — after all, they only need one or two home runs to satisfy their limited partners. Financial planners don’t have that luxury. They succeed by consistently hitting singles and doubles to deliver on behalf of their clients.
This creates an inherent disconnect between PE’s strategy of taking big risks for big rewards and advisors’ desire to operate in an environment where they steadily progress. While private equity money can allow greater scale and access to more services, it can also have a deleterious effect on an RIA’s culture.
When management looks to maximize profits by reducing costs — typically by cutting back-office support — advisors take on heavier lifts, which depresses morale, leading to advisor turnover.
Advisors don’t want to sign restrictive agreements, nor do they want to be in an environment where they feel squeezed and scrutinized.
Firms may attempt to dismiss those concerns, arguing advisor morale doesn’t directly affect client service. But if advisors are unhappy, their clients will feel it, too. It’s a vicious cycle that ultimately leads to burnout and disappointment.
READ MORE: Breakaway advisors stuck in limbo as SEC registrations stall
Good culture boosts bottom lines
Advisors who launch their own practices are typically focused on two main areas: work-life balance and career goals.
During the COVID-19 pandemic, advisors were looking for more flexibility to start or spend more time with their family. Launching their own practice allowed them to do so. It also allowed them to focus on serving the types of clients they were most passionate about in an environment where they felt supported and fulfilled.
Throughout my career, I’ve found that advisors and team members want to be a part of something they can be proud of, with people they enjoy and where they can positively impact the lives of others.
Ultimately, if advisors want to provide the best service, they must work in an environment where they feel valued. Every advisor should ask themselves whether they are part of a culture that allows them to achieve their personal and professional goals — and if not, why not.
