While the influx of private equity money into the North American wealth management sector is a well known one, there”s more than one way to inject capital into the sector and manage growth. We look at a range of perspectives in this feature.
There are many ways to buy into the wealth management story and
the multi-trillion-dollar wealth transfer under way. The most
significant route appears to be the torrent of private equity
money entering the space.
It is no wonder why private equity funds like wealth management,
which is riding a wave of a multi-trillion dollar
intergenerational wealth transfer. The sector is seen as
generating relatively sticky revenues – although the
disruptive power of AI on some business models might be a cause
for caution. Global private equity dry powder
– uncommitted capital available for new investments
– stood at $2.184 trillion as of March 31. 2025,
down 5.2 per cent from its highest year-end total on
record of $2.305 trillion in December 2023, according to an
S&P Global Market Intelligence analysis of the latest
available Preqin data, published December last year.
Private equity is, in fact, the dominant M&A model, but it is
a mixed blessing, depending on whom you ask. While some PE deals
may turn out fine for advisors, and just as importantly, their
clients, it comes with conditions. For example, a PE firm
typically has a time horizon of around five to seven years, with
a hoped-for exit.
Aly Kassim-Lakha, CEO of Aspen Standard
Wealth, has a different approach. Aspen is a business that
has grown to about $15 billion in AuM through acquiring a raft of
RIAs since its launch in 2024.
“We are partners in perpetuity,” Kassim-Lakha told Family
Wealth Report in a call. “The relationship is one where
success is not about quarters [results] but lifetimes and
generations. I had felt there was a service model worth
upholding. There are too many cases of a business being sold
every three to five years.”
In March, Aspen, based in New York City, acquired BlueSky
Wealth Advisors, a North Carolina-based RIA with $1 billion in
AuM. Other recent deals include MG Financial, SKY Investment
Group, New England Private Wealth Advisors, Martel Wealth
Advisors, DHK Financial Advisors, and Summitry. Aspen has so far
acquired 10 firms – more deals are in the offing in coming weeks,
Kassim-Lakha said.
Under its revenue model, Aspen buys back the equity of those who
want to sell their business; Aspen will keep majority ownership
and control.
While the Aspen approach might gain traction, the “barbarians” of
private equity appear to be as hungry as ever.
In January this year, AdvizorPro, a business tracking ownership
and timelines in the wealth sector, said that advisors thinking
of moving to a new firm must understand which of their potential
new businesses are backed by private equity and potentially near
an ownership change.
According to ECHELON Partners, a
US investment bank and valuation firm catering to the wealth
sector, during the third quarter of 2025, private equity firms
were involved, either directly or as a sponsor of a strategic
acquirer, in about 72.8 per cent of all year-to-date deals. The
percentage of strategic acquirer deals involving a PE-backed
buyer reached 75.4 per cent in the quarter.
A debate that continues is whether such owners, who typically
want to achieve a profitable exit five years after the initial
stake, have the patience for remaining involved in a professional
services business designed for long-term client relationships
spanning decades.
On the flipside, it might be argued that infusing capital to
support growth is as important as regulatory and technology
demands rise amidst a multi-trillion transfer of wealth. All that
AI innovation costs money. Another consideration is that if
private equity money does not appeal, the listed ownership route
also has challenges, imposing short-term shareholder pressures on
firms to deliver. Focus
Financial went
private in 2023. As we have
reported about AITi Global, being listed is not
straightforward. Being publicly traded is not a guarantee of
success, and carries its own distractions.
Another theme – highlighted by recent travails in the private
credit space – is that high multiples paid for firms might not
look so great if borrowing costs are elevated.
Minority stakes
One variation on a theme is the minority stake approach. Emigrant Partners,
for example, has taken such stakes. The minority stake means
that the founders don’t lose control, or at least get used to
external involvement at a pace that suits. Another example is the
case of Procyon, an
RIA in which Constellation
Capital took a minority position in April 2025. The financial
stake size wasn’t disclosed.
Phil Fiore, co-founder and chief executive of Procyon, heads a
business that boasts 16 owners, 64 staffers and more than 1,200
clients.
“There comes a point in every business that looks to scale when
you need to institutionalize your cap table and financing source.
That’s exactly what we did in bringing in our partner CWC into
our cap table. We can now structure much larger transactions than
we could previously, and we have more credibility in the
marketplace knowing we have a substantial backer behind us,”
Fiore told FWR in a call.
With some PE deals said to be reaching purchase price multiples
of the mid-20s when set against expected earnings, some industry
figures say the integrated “buy it and absorb it” approach
squeezes out the variety from the sector and ultimately to the
detriment of clients, even if the incentive for sellers to take
the money is clear.
Whether driven by PE money or not, the “integration model” of
acquisition – absorbing acquired businesses fully into an
existing structure – isn’t one that appeals to Nate Lenz,
co-founder and CEO at Concurrent.
“Full integration is not always in the best interests of the
client,” he told FWR. “You have seen a lot of innovators
in the space homogenize into the integrated model.”
“Average multiples for full sale transactions are well documented
in industry valuation studies and M&A reports. Many of the
industry’s highest reported multiples are tied to control
transactions, where advisors are giving up ownership and
decision-making authority. We think it’s important to look at the
value of the shares you’re keeping, as well as the shares you’re
selling,” he said. “We invest through minority partnerships in
our model, allowing advisors to access liquidity while retaining
control of their business, preserving their culture, and
continuing to participate in future growth. Because we’re
purchasing a minority interest rather than control, the headline
multiple isn’t always a direct comparison to a traditional
acquisition.”
Wake up integrated
A problem is that many advisors at firms may hope to become
partners and owners when their elder colleagues retire. Instead,
under an integration model, “they go to bed on Friday as an heir
apparent and wake up on Monday as an employee,” Lenz said.
The pricing model for Concurrent is a revenue override, such as
10 per cent of the advisor fees plus a fee for using its tech
stack, he said.
“There are some great legitimate reasons for the integration
model,” Lenz continued. With the rise of AI, and the costs of
deploying technology that clients come to expect, some firms
think they need the capital infusion and scale to shoulder the
burden.
“What can become problematic is when valuations become
disconnected from realizable value. A private equity investor may
make an investment at one multiple and later mark it at a
significantly higher valuation, but if that value cannot
ultimately be realized through a transaction, the mark becomes
more theoretical than economic. In the long run, realized
outcomes matter more than reported valuations,” he added.
Consolidation
One meta-theme that has been around for decades is the
expectation of industry consolidation. Kassim-Lakha said he
expects it to roll on.
“It is still a very fragmented industry. If I am an investor, I
am looking for a place to invest money in an area that is not
facing existential risk related to AI. AI has now changed how
investors think of what a safe haven is. With wealth management,
a lot of it is tied to human relationships. If anything, I see
momentum increasing.”
Kassim-Lakha agreed that while financial advisors were willing to
explain the virtues of business transfer and succession to their
clients, they can be less effective at applying these lessons to
their own business lives.
AI fuels the trend
There’s little doubt that AI adoption fuels some of the need for
fresh capital.
Procyon’s Fiore is positive on AI and its impact. “The purpose of
AI from my perspective is to give our team members the one thing
that we can’t create more of and that is time. If we can give our
team members tools that make them more efficient and therefore
save time on completing certain tasks for clients, that `extra’
time can be used to further service our clients.
“Something as simple as having an AI notetaker can make a big
impact. We’re implementing technology that helps with meeting
preparation, takes notes during client meetings, updates our CRM,
and ultimately assigns the follow-up work that comes out of those
conversations. That’s a huge lift for our team,” he said.
Achieving the kind of scale that external capital can help
provide also matters for firms seeking to attract and retain
talent. Advisors want the latest tools if they’re to achieve
results.
“We want our talent to perform at the highest levels. In order
for them to do that, they need to have proper tools to execute at
the speed and quality that they need to. As a firm, our role is
to anticipate these needs, equipping our talent with the tools
and support them to succeed,” Fiore said.
The dream of larger scale begs the question of what the limits
might be. Again, this suggests that there may be limits to how
much more PE funds will spend.
Fiore is not interested in scale for its own sake.
“I only want us to be the “best” for the markets we serve. I
think of a time when I was growing up in the business where there
were the `big’ wirehouses like Merrill, Smith Barney, Morgan
Stanley, but you also had these incredible boutique wealth
managers such as DLJ, Wheat First, Bear Stearns – just
to name a few. The culture in those boutique firms was undeniable
and highly respected on Wall Street. As we scale, our blueprint
draws inspiration from that unique, agile boutique model rather
than a standard, large-scale corporate framework,” he said.
Fiore put some numbers on his ambitions. “By the end of 2029 I
would like our RIA to be managing $45-50 billion for clients and
organizations throughout the country and producing over $100
million in gross revenues. I expect we’ll have approximately 100
financial advisors and another 200 team members supporting our
clients nationwide,” he concluded.
For the moment at least, it looks as if the weight of private
equity money isn’t going to decline any time soon.
(If you wish to comment on this story, email the editor at
tom.burroughes@wealthbriefing.com)
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