Advisors Want A Paycheck

I used to talk to a lot of financial advisors who were interested in joining Ritholtz Wealth Management. Those conversations slowed down dramatically post-COVID. Now they’re picking back up as fast as they stalled out, and I want to talk about what led to this fall and rise.

During the era of zero interest rates, the wealth management industry became an attractive destination for private equity money. The cash flows that certain RIAs produce share characteristics with some of the highest-quality bonds, but with a huge kicker: growth. For the last 10-15 years, you had a combination of a rising stock market, a demographic tailwind, and insane fragmentation. Nobody, and I mean nobody, has any market share. So with some professional management and a lot of capital, the space was ripe for consolidation. That’s exactly what happened, which is the primary reason advisors stopped reaching out to us.

Organic growth is difficult. There’s no shortage of options for investors to choose from. An easier (not easy) way to grow is to acquire individual advisors or whole firms who can bring over 50 (500) households or more in a single clip. This inorganic growth story has been one of the defining trends of the industry over the last decade. And the competition there has gotten fierce, driving the bar lower for what defines an attractive acquisition while simultaneously pushing up multiples. Some of the stories I’ve heard over the last few years have been hilariously stupid in the sense that there’s no way an attractive return will be had on the investment. Seven times revenue for an advisor with $30 million in client assets? Sure, why not? Full indemnification if your former employer sues you, plus a guaranteed payout, plus equity? Done.

Any time an RIA would update its ADV, even if it were a solo practitioner, an army of people would call them with a blank checkbook. And so it wasn’t a mystery to us why the number of advisors reaching out to us fell by 75%. We’re a great place to work, and our compensation is more than competitive, but we’re not private-equity money competitive. We don’t write checks for advisors to come here, and we never will. I have 26 advisors who stiff-armed a payout to be here. It wouldn’t be fair to them to change course now.

So, given this backdrop, we’ve only added 1 or 2 advisors a year for the last few years, which is fine by us. I don’t begrudge anybody for taking the money, I’m a capitalist too. The advisors who chose us over a check over the last few years are special people. I am dedicating my life to ensuring they feel like it was the best professional decision they ever made.

After speaking with 20 advisors in 2025 (I made that number up, but it feels rightish), I expect that this is not a countertrend rally. This one has legs. I’ll tell you why.

Private equity coming into our industry has had mixed results. I certainly don’t want to say they’re all this or that, because there are good and bad, like everything else. But here is what I will say without any throat clearing. All paychecks come with certain strings attached. I won’t get into what they are here, but you can imagine.

Moving from one firm to another is not insignificant. First, you have to find your tribe. Then you have to learn the ins and outs of their business, their culture, tech stack, and their compensation structure, to name just a few of the considerations. Then, when you finally decide to move, you must ensure you do it the right way. What does your contract say? This is code for, I need to pay a lawyer to tell me how to stay out of any potential trouble. Then it requires conversations with each of your clients, sometimes two or three, explaining why you left and why they’ll be better off for it.

I say all that because advisors who leave have to get it right. You can explain to a client why you’re leaving one time. You can’t do it again. The advisors I’m hearing from today are not interested in the strings. They want a forever home. For those people, we’re a great option. We’d love to hear from you if you're one of them. Email [email protected] 

The other reason advisors are starting to reach out is demographic trends. It was common to see advisors hanging their own shingles around their 30th birthday. I’m already getting long here, so I’ll keep this part very short. Being a financial advisor and owning and running a financial advisory firm are two very different things. As these advisors hit 40, they’re starting to rethink what they want the next twenty years of their career to look like.

And finally, in a similar vein to the prior reason, we’re hearing from advisors whose senior partner made promises they’re not keeping, particularly on the equity side. And should they bring in their child to take over while the 40-year-old gets the shaft, well then it’s time to go.

All of my content at The Compound is centered around investing. Outside of that, all of my time is spent running the business with my partners. I think about our industry all day, and I’m very excited to be doing more content for advisors over at The Unlock, which I’d love for you to subscribe to.

Our first episode was with my friends at Wealth.com, which should need no introduction if you made it this far. Here’s what we have coming up.

This Wednesday at 11 I’m going to be talking with my friend Phil Huber about the massive push alternative asset managers are making into the wealth space. There’s been a lot of not-so-great headlines lately, and Phil is the perfect person to talk with about the topic, having spent time on our side as a CIO, and now as the head of portfolio solutions at Cliffwater.

The following week, I’ll be on with Dave Nadig talking about how AI will impact the future of financial advice. I have a super spicy take that we could be looking at an existential threat. I don’t say this lightly, and I’m not doing this just to be provocative.

After that, Jason Wenk and I will discuss the state of the custodial industry. I have many thoughts, I know Jason does too.

And the last person I have on the calendar is Kyle VanPelt at MileMarker talking about data lakes, a phrase that keeps coming up as people nod their heads like they know what that means. Full disclosure, I do not. MileMarker is helping RIA owners better understand their business by having a better handle on their data.

This is just the beginning. We’ll be doing episodes on practice management, organic growth, M&A, and everything in between.

Hope everybody is enjoying their weekend, and wishing all dads a happy father’s day!