The wealth management industry has a growth problem—and it may be getting worse. As WealthManagement.com’s Diana Britton recently reported, despite high margins and strong profitability, firms are experiencing what researchers call “prosperous stagnation”: little to no growth beyond market gains. While many are actively trying to address it, the stakes are high. This growth problem points to deeper structural issues that pose systemic risks to advisors, firms and private equity investors.
So, what makes organic growth not just a priority—but a necessity?
Growth as a gauge of value. While stagnant organic growth is often described as a “problem,” the more troubling dynamic is what it represents. Organic growth is a direct reflection of value creation. This is a universal principle across industries: compelling and valuable offerings drive demand and growth. As I wrote in an earlier column, “the absence of meaningful growth reflects … a lack of perceived value”.
This represents a fatal flaw that ripples throughout our industry. It poses an existential threat to many advisors, reinforces our industry’s reputational challenges, and stunts the industry’s long-term prospects.
Strong organic growth is crucial because it reflects robust value creation and signals a more vibrant, prosperous, and trusted industry.
The talent deficit. We face an emerging talent crisis. Attracting and developing new financial advisors has always been challenging; we’re not widely viewed as a revered profession. Over the next decade, 100,000 advisors are set to retire, yet historically, 85% of new hires wash out. At the firm level, there is an emerging trend of G2 advisors struggling to progress, realize opportunity and develop to their full potential. And many advisors don’t have succession plans and no clear successor in sight. Together, these create a vicious, unsustainable cycle.
Growth is vital because it begins to break that cycle. Growth attracts talent. People naturally want to be part of organizations and industries that are thriving—it signals opportunity and momentum. Systematic growth reflects a higher-value industry, generates capital, and creates opportunity for development and advancement. It will help draw in the next generation of advisors and makes firms more attractive destinations for both talent and M&A.
Vibrant growth signals vitality and relevance—a profession seen as valued and prosperous.
Enterprise value at risk. In less than a decade, private equity has turned wealth management into a magnet for capital—pushing annual deal flow from $130 billion in 2015 to nearly $910 billion in 2024. Yet the era of consolidation and multiple expansion through financial engineering and efficiency gains may be rapidly coming to an end, with multiple compression becoming the norm for many firms. And firms that experience multiple compressions because of stagnant organic growth will continue to face downward pressure from a higher cost of capital, the reduction of growth capacity that often accompanies the push to increase EBTIDA margins through expense management, and the negative impact on recruiting and M&A efforts. It creates a vicious cycle that stymies NNA growth.
Instead, systematic and systemic organic growth is proving to be the enduring driver of enterprise value, profoundly affecting EBITDA and multiple expansion. Organic growth is highly efficient, and a 1% increase can lift EBITDA by 2.5% or more. Yet the real power is in multiple expansion, as a 1% increase in organic growth generates up to + 1x in multiple.
Combined, this means a lift of 3% in organic growth can result in a 25%+ increase in enterprise value, generating hundreds of millions more in value for RIAs and billions more for large B/Ds. This is a reward for scalable, repeatable enterprise-wide growth, and because so few firms exhibit these traits, it would not be surprising to see their demand and, hence, value further amplified.
Organic growth is vital because it spurs a virtuous cycle of growth that represents a stronger recruiting and M&A profile, increasing profitability and favorable capital inflows, all helping to drive NNA and enterprise value.
Last word on organic growth. Organic growth is the single most reliable test of an industry’s vitality. Stagnation signals declining value creation, amplifies talent erosion, and puts enterprise value at risk.
Firms that fail to engineer systematic and systemic growth will not just stagnate; they will become the source of their own multiple compression.
With it, the flywheel turns. Growth validates the value of advice, draws in the next generation of advisors, strengthens succession, and fuels capital inflows. It commands premium multiples and creates compounding momentum. Systematic, repeatable organic growth doesn’t just sustain firms—it redefines the industry’s relevance.
That’s the choice we face: continue masking the problem with short-term fixes or build the enduring growth engine that secures the future of advice. Only one path creates lasting value.
