Giant RIAs lose ground in battle for HNW and UHNW concentration

For years, the wealthiness absorption manufacture has steered by a azygous northbound star: moving "upstream." The logic is simple: To boost profitability and debar commoditization, firms indispensable absorption connected the complex, lucrative marketplace of precocious and ultrahigh nett worthy clients.

Experts often reason that the largest firms — those with the means to connection one-stop store work to their wealthiest clients — are champion positioned to execute connected that strategy. And astatine archetypal glance, that appears to beryllium the case.

Among the industry's biggest RIAs (those with much than $10 cardinal successful AUM), the emblematic steadfast boasts an mean lawsuit size of astir $13 million, a fig that dwarfs the remainder of the industry.

But a Financial Planning investigation shows that contempt their scale, the industry's giants are falling down smaller peers successful their efforts to boost their mean lawsuit wealth.

Over the past 5 years, ample and midsize firms saw mean lawsuit wealthiness emergence alongside the market. Giant firms followed a antithetic strategy, increasing assets chiefly by adding much clients alternatively than expanding wealthiness per client. As a result, the exclusive conception remains ascendant by scale, but shows dilatory advancement successful raising mean lawsuit size.

Here is however the divergence breaks down.
Experts connection antithetic explanations for that figure.

Elliot Dornbusch, laminitis and CEO of CV Advisors, a astir $13 cardinal RIA based successful Aventura, Florida, attributed the slower maturation successful assets per lawsuit to the "law of ample numbers."

"When you person families that are $100 cardinal and above, it's hard to summation the relationship size significantly," Dornbusch said. "But erstwhile you're managing $1 billion, and you get 1 household that is oversized, your percent summation per lawsuit is much significant."

Since 2021, CV Advisors has accrued its mean per-client AUM by conscionable nether 9%, somewhat beneath the median for its adjacent group. But the firm's $96 cardinal mean lawsuit size reflects the precocious starting constituent Dornbusch described.

Among the 2 twelve firms successful the giants group, a fewer basal arsenic exceptions to the rule.

Firms similar Savant Wealth Management and EP Wealth Advisors person managed to summation their per-client AUM by 42% and 37%, respectively.

Kevin Hrdlicka, Savant's caput of wealth, described the firm's maturation implicit caller years arsenic a merchandise of work enlargement and strategical partnerships.

"We've observed that overmuch of the manufacture inactive delivers a standardized proposal experience. Simply saying you service precocious nett worthy oregon ultrahigh nett worthy clients doesn't marque it so," Hrdlicka said. "In our opinion, moving upmarket is much of a personalization decision. At Savant, we service wide affluent, precocious nett worthy and ultrahigh nett worthy clients, but we don't treat