Welcome to the Alts Sunday Edition 👋
For the past 85 years, Registered Investment Advisors (RIAs) have been a cornerstone of personal finance.
RIAs manage trillions in assets and have traditionally helped clients navigate the full investment landscape. From retirement, to inheritances, to tax planning.
But that landscape is changing quickly. Clients are getting smarter, and RIA fees are under pressure.
This pressure is happening amidst massive consolidation in the industry (hundreds of firms are getting rolled up into PE-backed wealth management platforms), while social media & AI chip away at the advisor’s role.
In this issue, I’m sharing some thoughts on the state of financial advice as we close out 2025.
Let’s go 👇
Table of Contents
The RIA footprint
First, let’s be clear about where the RIA industry is at today.
Since the Investment Advisers Act first established and legalized RIAs back in 1940, the retail wealth management market (~$20m in investible assets) has become massive.
As of 2024, RIA independent advisory firms in the US oversee ~$8 trillion in client assets. To put that in perspective, RIAs control more than one in every four dollars professionally managed in the US (that’s up from 17% in 2007).
So any talk of the industry’s “demise,” or of RIAs becoming irrelevant, is hard to take seriously. This is an industry with decades of habit and inertia baked in.
That said, the last 15 years has pulled back the curtain on the conflicted incentives & outdated playbooks. It’s all become impossible to ignore.
An unspoken conflict of interest
RIAs are fiduciaries, which means that unlike social media “finfluencers,” they are legally required to act in their client’s best interests.
But the way the industry is structured makes doing that a bit more complicated than it sounds.
In the US, the standard RIA model is simple: advisors charge a flat percentage of assets under management, usually 1% of AUM, charged once per year. (In parts of Europe, it’s often 2%, and sometimes there’s a 5% upfront cut for each investment!)
Bottom line: The more cash you move under their umbrella, the more they earn. That’s it.
(Note: There are other models, including commission-based structures which pay advisors when clients buy certain products such as mutual funds or insurance policies. But the percentage fee model is still the most common.)
This commission structure creates an awkward dynamic, because any assets held outside the RIA’s control (like real estate, crypto wallets, or of course alternative investments through Altea) don’t generate any revenue for the advisor.
RIAs want you to do well, but they also want you to do well within their sphere. This isn’t necessarily malicious! But it results in a system that rewards consistency and control over creative portfolio construction.
Have RIAs kept up with the times?
An age-old problem
I recently had a chat with Manish Jain, founder of a platform called Mezzi, which uses AI to help investors answer complex financial questions without relying on traditional advisors.
Manish grew up around advisors, and spent a decade on Wall Street before building Mezzi. He pointed out that most RIAs are built to serve people who already have wealth, not people trying to build it. Younger clients are rarely profitable, so they’re often ignored.
“The industry is not really set up to serve the younger generations, because they don’t have the assets that make them profitable to serve.”
This is an “age-old problem” in the industry. But it’s getting worse.
According to JD Power, only 11% of clients at traditional wealth management firms are under 40. Younger investors are increasingly moving toward to robo-advisors like Betterment, and non-AUM planners like Mezzi, and DIY investing platforms like Robinhood.
Now, the irony is that most people aren’t great stock traders. In fact, community member Maverick Equity Research recently pointed out that most Robinhood traders would be better off ditching the day trading, and just buying Robinhood stock itself.
The asymmetry of information & access is gone
While Robinhood isn’t in danger of replacing RIAs anytime soon, there’s no question it’s helping reduce the asymmetry of information and access that once protected the industry.
Decades ago, financial advisors had access to all sorts of market data and tools that clients didn’t. Proprietary research, institutional relationships, trade execution channels. The value proposition was simple: trust the expert (because you really have no other option!)
Today, of course, people have plenty of options. Access has exploded. Anyone can find a fund, look up the performance, compare fees, and click BUY. Nearly all of the old gatekeeping is gone.
On the information side, there is more publicly available financial knowledge than ever. People are learning on their own, and beginning to trust their own decisions, as opposed to outsourcing money to someone else.
And on the access side, well, right now is the easiest it’s ever been. You could argue RIAs have less access than their clients!
People realize it’s ultimately very easy to put your cash into a few passive Vanguard funds, and let it ride. Heck, that’s basically what an RIA will do anyways. Why bother paying the 1% fee?
Sure, there is additional value that an RIA provides. Advice comes in many forms.
But if your portfolio is full of stuff you could just buy yourself through any online broker, what’s the point?
Fees are getting compressed
This growing realization has put the industry in a somewhat precarious position. At a minimum, it’s affecting advisors’ ability to charge a premium.
A report from Cerulli Associates forecast that by 2026, 83% of advisors expect to charge less than 1% for clients with $5m+ in assets.
Robert Stark, CEO of Nomura Capital Management put it bluntly in a recent podcast:
Across the entire industry, there is a continuous push towards lower fee products. This is true on the passive side, the active side, the public side, and the private side. It’s true everywhere. – Robert Stark, Nomura Capital Management
To maintain their fees, advisors will need to offer wider range of funds and services. That definitely includes alternatives.
RIAs are under-selling alternatives
This is the big one (for me).
RIAs are under-selling alternatives, and it’s because they often have a weak alternative investing playbook.
The ability for an RIA to suggest & purchase alternative investments is far narrower than it should be. They’re sort of limited by access, due diligence, and outdated firm mandates. It’s all pretty commoditized from one advisor to another.
Alternatives are harder to track by nature. They’re less liquid, and most importantly often exist outside the advisor’s fee-generating universe. If it’s not completely ignored, it’s often an afterthought at best.
For RIAs, due diligence on alternatives is tricky, and admin fees can add up to a whopping 10% per year.
But the biggest issue is access. You know how people often mention the “democratization” (ugh) of alternative assets? How software and policy have widened the landscape of who can invest?
Well, that applies to RIAs as well.
Lately, RIA-focused platforms like CAIS and iCapital (👀 which is scooping up smaller competitors) have helped RIAs navigate the maze.
But this world is still so small compared to mainstream investing.
A 2025 survey found that across the RIA segment, the implied allocation to alternatives was just 0.78% of total client assets! (Experts generally agree an ideal range is 10-30%)
This under-selling of alternatives flies completely in the face of what modern investors are looking for. There’s a growing skepticism toward traditional investment vehicles’ ability to deliver robust returns consistently.
According to a recent Bank of America study, 70% of investors aged 21 to 43 believe traditional asset classes alone cannot deliver the returns they seek.
Younger investors are turning to alternatives that RIAs often simply cannot provide, allocating ~31% of their portfolios to alts.
Almost none of that goes through RIAs.
Private equity is rolling up RIAs
Mergers, acquisitions, and rollups are becoming big themes for this industry.
Independent advisory firms are being acquired by the dozen, and PE is behind a majority of these deals. Major players like CI Financial and Mercer Advisors have led the charge, snapping up dozens of firms and reshaping the industry’s economics.
In 2023, there were 269 RIA acquisitions involving firms with over $100 million in AUM. Echelon Partners reports that over 70% of RIA acquisitions involve a PE sponsor.
“The RIA segment is changing quite dramatically. 10 years ago, there were 10 RIAs with 10 billion of assets or more. I think now there’s 280. At the end of the day, some of those firms essentially look and feel like mini-warehouses.It won’t take too long until you see the first RIAs that have a trillion in assets under management.”
— Robert Stark, Nomura Capital Management
Why the rush to acquire? Scale, what else!
Rollups allow buyers to centralize operations, reduce compliance overhead, and lock in recurring revenue from high-net-worth clients. They also create cross-sell opportunities (estate planning, tax prep, insurance, all that fun stuff.)
To add fuel to the fire, this is all unfolding during a time when America’s RIA workforce is shrinking. McKinsey data shows high dropout rates and very few young entrants to the scene.
All this consolidation will bring trade-offs. What starts as a personal relationship with an independent advisor often becomes templated and impersonal. The same portfolios get reused. And the client may not even realize they are a small part of a massively scaled operation.
What happens when financial advice becomes centralized? Does it get stripped of independent thinking? Will advisors have to listen to PE overlords? Will the pendulum swing back?
“I can see almost a bifurcation, where you get some people being tired of that, and becoming independent again.
Almost like a cyclical journey by which you have more consolidation leading to a defragmentation over time. That’s going to be interesting to watch.” – Robert Stark
How does AI fit in?
AI can easily handle “finance 101” or “102” type content. It can simulate returns, retirement projections, and walk you through tax scenarios, all without the need to ask an advisor.
But the hallucination problem is likely endemic, and LLMs are especially wrong when it comes to math. Anyone who’s asked ChatGPT to do calculations knows how shaky the results can be.
This is exactly where AI-powered platforms like Mezzi are starting to find traction. In my view, they’re trying to replicate the guidance layer of financial advice (not the math layer) and then customize it for each user:
“We don’t believe in a world where you should just fully rely on an LLM for guidance. For example, LLM’s are really bad at math and we strive to remove any reliance on their math. We want to help you answer the questions that you need to grow your wealth, and make it relevant to you. How do you take into account your goals and match them with your wealth picture? That’s the real question.” – Manish Jain
His goal is to utilize AI’s strengths without exposing users to its obvious weaknesses.
‘Not investment advice!’
Since the dawn of social media, there has been a running joke around the phrase “not investment advice.”
Unless you’re a registered investment adviser or licensed broker, you’re not allowed to give investment recommendations on social media.
Under the Advisers Act of 1940, anyone who is “in the business of providing advice about securities for compensation” must register as an investment adviser, unless exempt. This includes personalized recommendations made through TikTok, YouTube, Twitter/X, Instagram, and Reddit.
(Note: One huge exemption here is the Publisher’s Exemption, which most newsletters and communities fall under — perfectly illustrating the strength of email vs social media.)
But thousands of creators do exactly this every single day — sometimes without even realizing it, other times wrapped in a “not investment advice” disclaimer. It’s become a joke.
The rules are designed to establish clarity, but it’s clear the law has not adapted well to technology.
First of all, the term “investment advice” itself is outdated and overly broad. What should count as investment advice, and who should be allowed to give it?
On one hand, I can see why countries would want to try and protect inexperienced retail investors from the Tai Lopez’s of the world.
China certainly sees it that way. Their new influencer crackdown bans unlicensed creators from covering ‘sensitive topics’ like finance, health, and law.
On the other hand, the libertarian in me thinks this is bordering on nanny-state stuff. I understand the dangers of letting grifters run wild, but worry it restricts other voices unnecessarily.
In my opinion, large social media accounts should be tied to a real person the same way internet websites are (through ICANN). Context matters, and too much privacy masks incentives. Perhaps that’s a happy middle both sides could agree on?
In the meantime, I love that you can go online and get so many different opinions. I don’t believe that just because someone has 10 years of experience, they automatically “know more” than someone with 5. I think credentials can help build trust, but they shouldn’t be the only way in.
The Internet Investment Advisor Exemption
There is now a path forward for online advisory platforms to operate within a regulated structure, without becoming a full-service IRA.
The SEC’s internet investment adviser exemption is the same legal classification used by robo-advisors. This designation requires delivering advice exclusively through an interactive website.
Closing thoughts: Are RIAs worth it?
For all of the headwinds facing the RIA industry, there’s still one enormous, enduring tailwind: lots of people don’t want to think about money at all.
They don’t want to make dumb mistakes. They don’t want to check financial news. They don’t want to rebalance a portfolio. They certainly don’t want to track cost basis or model tax scenarios.
They know they are probably getting overcharged, but are otherwise more than happy to outsource investing to someone they trust.
What people probably don’t realize is just how much RIA fees add up over time!
A 1% annual fee sounds small, but thanks to the beauty of compounding (which advisors certainly understand) means that the average American worker will essentially forfeit 26% of their total potential retirement wealth.
That’s one million dollars, gone.
RIAs provide real value, but the long-standing 1% fee looks increasingly fragile. It isn’t abusive and it isn’t ill-intended, but clients will question it more and more.
It’s a little sad to watch so much of the industry fall into the private-equity playbook, especially since there are many thoughtful, independent RIAs doing great work out there.
Yet, all this consolidation may help expand access to alternatives, improve due diligence, and modernize the toolkit.
RIAs need to evolve, and this consolidation could make alts a huge part of that evolution.
That’s it for today!
See you next time, Stefan
Disclosures
- This issue was written and edited by Stefan von Imhof.
- Thanks to Manish Jain and Maverick Research for reading early drafts of this issue, and providing helpful input.
- This issue was sponsored by Abundant Mines.
- Last but not least, (drumroll please) I am not an investment professional, and this is not investment advice. (Can’t forget that one!)
