The Organic Growth Gap

Key Findings

612 independent wealth management firms with $750M–$3B in assets, year-end 2022 to year-end 2025, from SEC filings.

1. Assets grew about four times as much as clients. The median firm’s assets rose 59% in three years, while its client count rose 15%. Assets outpaced clients at 95% of firms.
2. Under a balanced market assumption, most asset growth was the market. A 60/40 portfolio returned about 53% over the same three years. After taking that out, the median firm grew an estimated +1.3% a year, and 41% of firms were at or below zero.
3. Growth after the market is weakest at the oldest firms. Firms first registered before 2000 grew a median −1.3% a year after the market. 63% were at or below zero, and 6% reached the top quartile.
4. Growing firms added more people. Top-quartile firms added a median of five staff in three years. Bottom-quartile firms added one.
5. Some older firms disclose custodian referral programs that have ended. 32 firms report programs they’ve exited, or that now pay only on past referrals. Their median growth after the market is −1.2% a year, against +1.3% for all firms with a readable brochure.
6. Established firms that are growing are more likely to pay for introductions. Among established firms (first registered before 2010), those in the top half for growth were 1.7 times as likely to have an active paid referral arrangement (39% vs 23%, n = 98 and 210).

2. After a Balanced Market Return, the Median Firm Grew an Estimated +1.3% a Year

A balanced 60/40 index portfolio returned about 17.5% in 2023, 14.6% in 2024 and 13.6% in 2025: roughly 53% compounded. Taking that out of each firm’s asset growth leaves a rough estimate of growth beyond the market: mostly new clients and new money, less withdrawals.

How sensitive is this? Every firm’s clients hold a different mix. The more conservative the assumed mix, the less of the growth the market explains. Median growth after the market, and the share of firms at or below zero, if client portfolios returned:

• 35% over three years (conservative mix): +5.7% a year; 14% at or below zero
• 45%: +3.2% a year; 27% at or below zero
• 53% (balanced 60/40, used in this report): +1.3% a year; 41% at or below zero
• 60% (equity-heavy): −0.2% a year; 51% at or below zero

The benchmark is also before advisory fees. Netting a 1% annual fee from it, the median is +2.4% a year and 33% of firms are at or below zero.

The estimate also nets out withdrawals. A firm whose retired clients draw 4% a year needs new assets just to stay flat, so this measure reads low for retiree-heavy firms.

4. The Oldest Firms Grew the Least

The SEC records when each firm first registered as an investment adviser. The median firm in this band first registered in 2009.

• Before 2000 (156 firms): −1.3% a year; 63% at or below zero; 6% in the top quartile
• 2000–2009 (152 firms): −0.3% a year; 53% at or below zero; 13% in the top quartile
• 2010–2017 (184 firms): +3.7% a year; 24% at or below zero; 37% in the top quartile
• 2018 or later (120 firms): +5.8% a year; 23% at or below zero; 46% in the top quartile

6. Ended Custodian Referral Programs Show Up at Slower-Growing Firms

Item 14 of each brochure discloses client referral arrangements, including whom the firm pays. The current brochures of all 612 firms were coded; 610 were readable.

8. Minimums Are Common, High and Usually Waivable

A descriptive finding, not a growth driver.

Much of that gap tracks firm age: older firms set minimums more often. Among established firms (registered before 2010) the gap is smaller (−0.3% vs −1.3%, n = 119 and 90), and among firms registered since 2010 there’s no clear gap (+4.1% vs +4.5%, n = 183 and 44). Read this as descriptive, not as a growth finding.

About the Data

This report covers every SEC-registered investment adviser with a main office in the United States that, as of September 2026:

• managed $750M–$3B in regulatory assets
• drew at least 60% of its assets from individual and high-net-worth clients
• managed no private funds
• was independent (no outside control person, no affiliated advisers under common control)
• had 8 to 60 staff and offered financial planning

That’s 669 firms. 612 have a complete, comparable three-year history in the SEC’s data and form the peer set used throughout. The median peer firm manages $1.18 billion, has 16 staff and reports 724 clients. These are independent firms that offer financial planning: not wirehouse teams, national aggregators or solo practices.

Method

• Firms and filters: SEC investment adviser data as of September 1, 2026, compared with April 2023 (mostly year-end 2025 vs year-end 2022 figures). Filters as in About the Data. Of 669 firms, 52 had no 2023 baseline and 5 grew more than 300% on assets or clients (usually a change in how clients are counted, a merger or a restructure); both groups are excluded, leaving 612.
• Growth after the market: each firm’s three-year asset growth divided by a balanced 60/40 index return (Vanguard Balanced Index Fund Admiral Shares, VBIAX: about 52.9% cumulative for 2023–2025), annualized. This is an estimate: it includes client withdrawals, is before advisory fees, and actual portfolios vary (see the sensitivity list in Section 2).
• Clients: individual and high-net-worth clients as reported on Form ADV (Items 5.D(a)(1) and 5.D(b)(1)). A “client” can be an individual, a household or an account, depending on the firm.
• Registration date: the earliest effective date of the firm’s registration as an investment adviser in any jurisdiction, from the SEC’s adviser database (612 of 612 firms).
• Brochures: each firm’s current Form ADV Part 2A, downloaded from the SEC’s adviser database. 610 of 612 were readable. Minimums and referral arrangements were coded from the brochure text, with a quote from the brochure attached to every coded item; Of 969 quotes, 962 (99%) matched the brochure text exactly, 5 matched apart from PDF spacing, and 2 could not be matched.
• Significance: among established firms, seven brochure features were compared between the top and bottom halves for growth. Two differences are statistically significant (p < 0.01) and remain so after adjusting for the number of tests: legacy custodian programs (Stat 21) and active paid referral arrangements (Stat 23). Across all firms, the legacy-program difference between halves is also significant. The individual referral types (Stat 24) and stating a minimum are not significant. The size-band difference in Stat 10 is not significant either.
• Brochure base: brochure-based comparisons (Sections 6, 7 and 8) use the 610 firms with a readable brochure. Growth after the market is +1.3% a year for both the 612 and the 610.
• Outside sources: Advisor Growth Strategies’ 2026 RIA Deal Room Report, via WealthManagement.com; Mercer Capital, Brooks K. Hamner, “Organic Growth Is Becoming the RIA Valuation Differentiator,” July 30, 2026; Schwab’s 2026 and 2025 RIA Benchmarking Study pages.
• Associations, not causes: the data shows which patterns go together, not what causes growth.

FAQ