It’s no secret that private equity firms are chomping at the bit to invest in the RIA industry.
Private equity money has fueled an RIA M&A boom that grew for nine consecutive years in terms of volume, before dipping slightly in 2023, according to investment bank DeVoe & Company. Currently, most of the largest RIAs in the country are backed by at least one private equity firm. The top 11 acquirers, in terms of transaction numbers, that DeVoe identified for 2023 all have private equity backing.
Meanwhile, private equity firms have also increasingly turned to high net worth individuals, potentially the clients of the RIAs they invest in, as a source of capital for their funds. According to industry analysts, this can create conflicts of interest, even though there are other, more compelling reasons for private equity firms to invest in RIAs.