The independent RIA industry’s total AUM grew at a compound annualized growth rate (CAGR) of 15% over the last five years, according to research firm Cerulli Associates.

Exciting RIA and hybrid models offer Advisors far more operational autonomy and improved economics, and the ability to provide truly unbiased advice. Yet, despite these advantages, many RIAs struggle with one crucial element of business growth: developing an audience of younger clients.

This growth paradox is particularly concerning given that demand for hands-on financial advice has steadily increased. Since 2015, revenues generated from fee-based advisory relationships have grown from $150 billion to $260 billion in 2024. 

So why are some RIAs struggling to capitalize on this increased demand, especially since there’s a diminishing supply of experienced, high-quality financial Advisors? Let’s dive deeper.

The Traditional Referral Model vs A Shifting Paradigm

Historically, RIAs have relied heavily on referrals as their primary source of new business. In fact, referrals from clients, friends, or family account for 53% of new clients for Advisors on average. This model has been particularly effective with older clients, as 60% of individuals over 60 hire advisors based on personal recommendations.

However, the effectiveness of this referral-driven approach is waning as younger generations enter the market for financial guidance. The median age at which consumers first seek an Advisor is 43, significantly younger than the typical RIA client base (and younger than the average age of wealth management professionals in the US). 

This rising demographic approaches financial services with a different mindset, preferring digital channels for discovery and engagement. Millennial and Gen Z investors are seeking guidance earlier and making crucial financial planning decisions decades before retirement, operating in a digital-native ecosystem where life advice is researched, vetted, and selected through almost entirely online networks.

In addition, Schwab’s 2022 RIA Benchmarking Study delivered a sobering revelation — relying solely on upward market trends during turbulent times can drastically stunt the growth of a practice. 

Establishing trust and credibility is just one of the keys to attracting and retaining clients in the accumulation phase and aligning your practice’s trajectory with their financial journey.

Understanding the Next Generation of Wealth

Today’s emerging affluent investors differ dramatically from their predecessors in how they evaluate and select a financial guru. 

Where previous generations valued personal connections and face-to-face meetings, younger investors prioritize:

These preferences manifest in how the younger cohort selects who will manage their assets. 

Rather than asking a golf partner or business colleague for a recommendation, they conduct thorough research — reading online reviews, comparing service offerings, and evaluating an Advisor’s digital footprint before making contact.

Gen Z clients aren’t just looking for someone to manage their investments; they want a partner who understands their lifestyle, their aspirations, and their mindset. This generation has already faced a recession, inflation, student loans, and the seemingly unattainable dream of home ownership.

Holistic wealth management is in vogue these days, but to truly find success, industry pros need to deliver a bleeding-edge combination of value, culture, a commitment to business development, and an enviable, individualized client experience.

Challenges and Opportunities

To unlock sustainable growth, RIAs must adapt to the evolving landscape of client acquisition. 

This requires a fundamental shift from reactive to proactive strategies, leveraging digital channels to connect with the next generation of investors. Here are some essential moves to make:

Content marketing and SEO: Create valuable, informative thought leadership content that addresses the financial concerns of younger prospective clients — and lands at the top of search engine rankings. 

This includes blog posts, articles, instructional videos on TikTok and YouTube, and podcasts on topics such as budgeting, entrepreneurship, early-stage investing, and financial planning for specific life events. Optimize content for the latest search engine algorithms to ensure visibility and attract organic traffic. 

Social media engagement: Establish a strong presence on channels where your target demographic spends their time, such as LinkedIn, Instagram, and even emerging platforms like Bluesky and Threads. Share unique and useful info and graphics, engage in conversations, and build a community around your brand.

Offer an enhanced digital experience: Invest in technology that streamlines the client journey. This includes user-friendly websites, mobile apps, secure client portals, and robust communication tools. 

Virtual consultations and digital onboarding processes cater to the convenience-driven preferences of Gen Z and Millennial investors. Research by McKinsey found that improving your CX can boost sales revenues and profitability. 

Fostering Next-Gen Partnerships

For Advisors ready to transition to more freedom with an RIA model, embracing these strategies offers a significant competitive advantage. While established RIAs may struggle to pivot from traditional approaches, those building a new kind of practice can implement digital-first strategies from day one.

This evolution represents more than a simple tactical change. It requires a complete rethinking of how advisory relationships form and develop. For RIAs willing to adapt, this revolution creates unprecedented opportunities to build an enterprise aligned with the preferences of the next generation of wealth. 

Those who successfully overcome this gap will thrive as they connect with clients seeking guidance in a digital-first world. The senior consultants at TERRANA GROUP are here to serve as an essential resource and a true partner for the future of your practice — let’s start the conversation today!