Goldman, Wells Fargo scout RIA movement for new business opportunities

While wirehouses and many other large firms seek to hold out against advisors' retreat from them and their kind, some are finding a new place in the industry with the old adage: If you can't beat 'em, join 'em.

Industry giants like Goldman Sachs, Charles Schwab, Wells Fargo and LPL Financial are all looking for new business prospects in supporting one of the fastest-proliferating business types within wealth management — registered investment advisors. At a basic level, these mainstay firms are offering RIAs the custodial services regulators require for safeguarding clients assets and basic record-keeping and trade-clearing purposes.

But they're also going beyond that to provide Wall Street-level services outside a typical wirehouse setting. To be sure, Schwab, LPL Financial and Wells Fargo have all been working with RIAs for a long time. Both Schwab Advisor Services — now the largest custodian of RIA assets — and LPL's custody services have been around for decades.

Now many of these same firms, along with some newcomers, are finding ways to broaden their offerings to tech support, lending and other banking services and access to out-of-the-way markets like private equity and credit.

Wall Street without the wirehouse

Besides being a long-established money manager for the well-to-do, Goldman Sachs has tried its hand at having an internal business dedicated to retail investors. That experiment ended in 2023 with the sale of its Personal Financial Management business to the RIA aggregator Creative Planning.

Rather than compete, Goldman decided it would offer support to firms already working with retail investors. The firm has since turned to what it calls its One Goldman Sachs initiative to knock down any internal organizational barriers that could be preventing it from offering the full breadth of its expertise to clients.

Bryan Jacobi, previously at BlackRock, is now in charge of managing relationships with RIAs through the firm's One Goldman Sachs Registered Investment Advisors initiative. Jacobi said Goldman is working with nearly 90 RIAs with $10 billion or more in client assets.

Each one is assigned a relationship manager who's part of Jacobi's team.

"What that means in practice is it gives the firm a single point of contact, so that they don't have to navigate Goldman's org chart," Jacobi said. "Instead, they could call me, and they could say, 'Hey, Bryan, we're trying to think through our strategy for growth with high net worth clients. How can Goldman help me do that?'"

Goldman in turn has added a business line offering already existing expertise in investing and lending to the rapidly growing RIA segment of the wealth management industry. In the past 20 years, the number of advisory firms registered with the Securities and Exchange Commission has nearly doubled, going from 8,614 in 2004 to 15,870 last year, according to an industry snapshot released in May by the Investment Adviser Association and the compliance firm COMPLY. During the same period, RIAs' assets under management have swollen from nearly $27 trillion to more than $144 trillion.

Firms like Goldman no doubt see a burgeoning market. But behind their bids to support RIAs is also a sense that, for many advisors at least, the advantages of complete independence aren't all they're cracked up to be.

The 'maturation cycle' for RIAs

Jeremiah Barlow, the executive vice president of wealth solutions at the large RIA Mercer Advisors, said there's almost a "natural progression" in the industry. Advisors who grow restless as employees of large firms break away in search of greater independence.

Soon enough, though, many discover they either can't or don't like doing everything on their own and turn to a partner like Mercer Advisors, which has built its business largely by acquiring firms looking for additional support.

"The maturation cycle is something like they joined a wirehouse, built (their business) up, broke away, tried to do it on their own, but realized it was more complex than they thought," Barlow said. "They still want to be independent, but they also want to be able to provide all these great additional services."

Industry research adds backing to the notion that many advisors find going independent harder than they had initially thought. In an "Advisors in Transition" report written with the help of JPMorgan's fintech firm 55ip, Cerulli Associates predicted that the number of advisors at RIAs would increase by nearly 12% by 2028. During the same period, wirehouses would see their headcounts fall by nearly 6%.

Independence is easier said than achieved

Cerulli's report drew on more than 20 interviews conducted in the second quarter with advisors with $100 million or more in clients assets under management, along with executives at large RIA acquirers and private equity firms. Among other findings, it noted that many RIAs seek out support from a larger firm like Mercer for help with priorities like regulatory compliance (sought by 58% of the respondents), technological services (55%), retirement planning for advisors looking to hand their businesses down to younger colleagues (50%) and marketing campaigns (44%).

As it turns out, some of the largest firms that are buying up RIAs or supporting them in other ways sometimes need outside services themselves. Goldman Sachs and Wells Fargo — along with longtime players like Charles Schwab and Fidelity Investments — are among the many firms working to meet these needs with custodial services and other offerings.

Goldman, for instance, has struck up partnerships with large RIA support networks or aggregators like Dynasty Financial Partners, Creative Planning, Steward Partners and NewEdge Capital Group.

Jeremy Eisenstein, who oversees RIA sales for Goldman's global banking and markets division, said many advisors breaking away from wirehouses are coming from situations where they're used to having easy access to different markets and investment products.

"They're coming from institutions that do all the things we do, and so we've been able to put that into a framework now with those aggregators that allow them to feel a familiar environment from where they're from," Eisenstein said.

Goldman isn't the only one seeing opportunity in helping RIAs who find it harder to go alone than they had initially thought. Both LPL Financial and Raymond James have established channels specifically for advisors who want to run RIAs and charge clients a simple fee collected at a percentage of the assets they have under management.

CEO Rich Steinmeier said in an earnings call in August that he believes many advisors who dream of casting off all connection to a larger firm often end up thinking twice after they realize how difficult it is to go it alone.

"You know as an RIA, they're responsible for their own regulatory compliance and risk management, in addition to running the responsibilities of small business like tech and HR," he said.

Employee advisor, independent, RIA? Wells Fargo has a place for you

Wells Fargo sees similar opportunities. The firm has long used its First Clearing division to provide custodial services to RIAs.

Next year, the firm plans to add its own channel for advisors who want to run RIAs under the Wells Fargo umbrella. Erik Karanik, the head of independent solutions in Wells Fargo's wealth and investment management business, said a few advisory businesses will be brought into the new RIA unit in late 2026, and then the offering will be extended to more firms in 2027.

The new unit will sit alongside Wells Fargo's private client group, for advisors working as direct employees, and Wells Fargo Advisors Financial Network, or FiNET, for those who prefer to be independent contractors. Karanik said one reason for having so many affiliation options is that they allow advisors who want to change the type of business they operate to do so without leaving Wells.

"It's helped us retain those advisors that want to think about being their own CEO, think about building their own business and having that opportunity," he said. "The other point that I'll mention is it's helped us recruit. It's really helped us recruit wirehouse advisors into the employee side, knowing that they can move (to some other affiliation) at some point."

Like his counterparts at Goldman, Karanik sees Wells Fargo's larger financial services offerings as a great advantage for RIAs. As an example as to why, he cited the firm's large banking business. Without that bank connection, he said, advisors would be forced to go searching for outside expertise whenever their clients need help, say, arranging a loan.

"Now you're introducing a third party, a credit union or local institution, bringing them to the mix where, in our view, you have that all here in one place," Karanik said.

Schwab's bid to open alts for all

One of the biggest demands RIAs have is for help enabling their clients to invest in private equity, private credit and nonpublicly traded investments. Wealth managers in recent years have been touting the sometimes strong returns and diversification benefits of these alternatives to stocks and bonds as acceptable tradeoffs for their often high fees, obscure fundamentals and barriers to withdrawing money.

With RIA demand for alts in mind, Charles Schwab executives announced earlier this month that they were buying the firm marketplace Forge Global in a $660 million deal. Speaking in Denver this year at the company's annual IMPACT conference, CEO Rick Wurster said RIAs now custody roughly $5 trillion in client assets at Schwab.

"We've got roughly 1% to 2% exposure to alternatives among our RIAs on our platform," he said. "We think that number, over time, is likely to grow quite significantly."

Schwab had already offered support to independent RIAs through a division called Schwab Advisor ProDirect, which provides consulting and other services in return for a fee, and the Schwab Advisory Network, which refers clients to outside RIAs when the client's needs go beyond what can be supplied by Schwab brokerage branches.

Wurster said Schwab plans to use the Forge deal to ensure all of its RIA partner firms have access to private markets within the next couple of years.

"Schwab will be the place for private market sellers to find interested buyers and vice versa across our retail and advisor services client segments," he said.

The cost of going it alone may be slow growth

Goldman has likewise set a high-priority goal of making it easier for RIA clients to broaden their portfolios beyond stocks and bonds. One of the biggest complaints about private equity, private credit and similar investments is that they are illiquid; often, investors can take their money out only at certain times and in amounts subject to caps.

Last year, Goldman announced it would provide more liquidity for RIA clients who've invested in private markets by allowing them to put up alternative assets as collateral for loans. Jacobi said Goldman has also sought to ease the complexities of portfolio building through a partnership with the fintech firm GeoWealth.

GeoWealth specializes in producing ready-built portfolios known as turnkey asset management programs, or TAMPs, which advisors can essentially take off the shelf to meet a variety of investor goals.

"And when RIAs outsource investment management to Goldman, they get an institutional multi-asset approach," Jacobi said. "We help them think about product selection. We help them think about how to integrate alternatives into their portfolios. And then we deliver that through technology."

Jacobi predicted there will always be room in the wealth management industry for small advisory businesses that really do want to be independent of large partners. It's those with growth ambitions that will eventually have to look outward for help.

"I think the ones that differentiate themselves, the ones that grow faster, that build better businesses, that have higher valuations, those are the ones that are going to lean into having partners," Jacobi said. "They're going to be really strategic about how they build a value proposition for their end clients and build a differentiated level of service that enables them to grow."