Why RIAs should avoid private equity in succession planning

Most RIA mission statements espouse core fiduciary tenets like integrity, excellence, putting clients first and delivering unbiased advice. Indeed, such values are so commonly referenced across independent advisory firms that it can become hard to tell us apart — let alone from large custodians like Schwab and Fidelity that would be more than happy to directly service our clients.

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I’d argue that an independent advisory firm’s true fiduciary differentiator can be found in its succession plan. I’d further assert that if the plan involves private equity, there’s likely a misalignment of values between the RIA seller and the PE buyer. 

Will it be a successful exit? Sure, probably. But it also carries echoes of fiduciary failure.

READ MORE: Why some RIAs aren’t riding the private equity wave

PE’s open agenda

It’s no surprise that private equity is pouring money into the RIA space — it’s a high-margin, recurring-revenue business with sticky client retention. 

RIA owners are increasingly turning to this easy liquidity solution. According to a study by AdvizorPro, between July 2024 and July 2025 “total AUM controlled by PE-owned RIAs climbed 14% to nearly $6 trillion representing 22.96% of all $100 million-plus RIA assets.” 

RIA leaders can say they’re client-first, long-term-oriented and prioritize stewardship and culture. But the succession planning process crystallizes a choice most would rather leave blurry: Is my firm something to be stewarded, or quickly monetized?  

Let’s be clear about what private equity managers optimize for: timebound returns, leverage and exit. 

That’s not a hidden agenda, that’s PE’s stated model. When an RIA that claims to value people above all else hands over control to a company whose job is to extract value on a fixed timeline, actions start speaking louder than words. 

READ MORE: How ESOPs and 1042 rollovers are reshaping RIA succession plans

Internal alignment

The alternative, internal succession, can be harder. Employee ownership can be messier. Stewardship takes patience. You don’t get one big check or a clean exit. The blueprint isn’t simple or obvious. 

It also forces founders to face uncomfortable questions like: Do I actually trust the people who helped build this? Am I willing to earn enough instead of everything? Do I believe in my firm’s values beyond my own tenure?

But the upside can be so, so sweet. 

There’s potential for a thoughtful glide path crafted from a place of organizational strength. The chance to see the next generation rise up and lead. To look your clients in the eye and say, honestly, that they were front and center when you considered your succession plan. 

In short, you get something far less flashy but far more profound: alignment between what you say and what you do. 

So before you polish your next mission statement or redraft your core values, take a hard look at your succession plan. Does it actually reflect your firm’s values … and your own?