Philip Palaveev parting shot
Ranking The Heavyweights
Look closely , and you can see what separates the largest firms from the smallest .
S uCCess Can Be a selF-FulFilling propheCy .
When ria firms achieve success , their owners continue investing in growth . some of the nation ’ s largest firms reinvest nearly 50 % of their profits as a principle . this creates momentum that then attracts talented people , whose ambition will help the firms grow and attract even more client relationships . increased revenue and profits allow ria firms to tap even more resources to grow . there ’ s more to success , of course , than a firm ’ s size , but the biggest firms in the ria space still enjoy a lot of the glamor . you could say they have the same kind of prestige that boxers in the heavyweight division often do . they have the “ punching power ” and all the rocky-level drama . While heavyweights can occasionally be “ flabby ,” they command all the attention .
What It Takes To Be A Heavyweight ( In The Top 100 ) to be included in Financial Advisor ’ s list of the top 100 rias ( what i call the “ heavyweights ”) a firm had to have more than $ 5.4 billion in assets under management at the end of 2021 . to be ranked in the top 10 required well over $ 47 billion . Clearly , these rias are no longer small organizations operated by a few partners . in fact , the average heavyweight firm had a team of 180 employees servicing a median 1,551 clients . the barriers into the league of heavyweights keep growing dramatically too . the 2017 version of this list cut off firms at $ 2.3 billion in assets , half the size needed today . in 2012 the number was $ 1.1 billion in auM .
While much of that tremendous growth was created by the financial mar-
Of the top 100 firms , 18 % say that their No . 1 growth driver is mergers and acquisitions .
kets , consolidation has also played a role in reshaping the ria ecosystem .
Heavyweights Are Consolidators in fact , M & a may be the most common path to the top of the list in recent years . helping that trend along now is institutional capital . Forty-one percent of the top 100 firms in Financial Advisor ’ s ria survey report having institutional investors . in contrast , 20 % of what we ’ ll call the “ cruiserweights ” ( firms that ranked from 100 to 200 in size ) have institutional investors . only 7 % of the firms ranked from 200 to 500 (“ middleweights ”) report outside ownership . of the top 100 firms , 18 % say that their no . 1 growth driver is mergers and acquisitions . ( see Figure 1 .)
Heavyweights Are Surprisingly Faster
Canadians like to say you don ’ t have to be faster than the bear , just faster than the other guy running from the bear . But what happens when the other guys are continued on page 70
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