There are over 15,000 SEC-registered RIAs in the US, a testament to the growing appeal of independent wealth management. Yet, a striking statistic reveals that approximately 87% manage less than $1 billion in AUM, translating to roughly $8-10 million in revenue. Go back to 2015, and you’ll find 90% of the 12,000 RIAs were in the same boat. Despite increasing industry AUM concentration and booming asset markets, the majority of firms haven’t crossed that $1 billion threshold. Why is this?
Well, most of these RIAs are, for the most part, lifestyle businesses—thriving practices run by their owners. And don’t get me wrong, these are often great businesses, very profitable, and offering clients fantastic service. If you were to ask them, most owners are content and don’t want to put in the time, money and effort required to build an enterprise-level RIA.
But for those who do want more, they often hit a wall somewhere in the $250 million to $750 million AUM range. Referrals keep coming, and it’s easy to assume this growth will continue on autopilot… and then boom. They hit a wall. The realization sinks in: what got you here simply won’t get you there. That’s the pivotal moment where RIA owners have to make a critical decision: Are they truly committed to breaking through to the next level? Are the needed changes—the mindset shifts, the investments, the hard work—worth the squeeze?
Because continuing down the same path will only lead to a few percentage points of organic growth per year at best. Embracing a different approach—a shift in mindset, from practice to enterprise—is the only way to build a lasting legacy bigger than just the founders, something that continues to thrive for generations. Let’s unpack what that shift entails and see if it’s the right path for you.
The Practice Mindset: Comfortable, But Constricting
The practice mindset is like your favorite routine. It’s where most RIAs start: personalized service, close client relationships, with the advisor front and center. In the beginning, this works well. You’re hands-on, involved in everything, building those relationships that drive initial growth. This mindset prioritizes individual effort, direct control, and often feels like everything hinges on you.
But the problem is that that strength can turn into a limitation. You, as the advisor, become the choke point. You’re working in the business, not on it. Decisions are centralized, innovation gets stifled, and growth depends entirely on you. It’s a natural limit to growth. This mindset is characterized by:
- Overlapping roles and responsibilities: Everyone chips in where needed, but there’s a lack of defined function.
- Limited coordination: Services are likely inconsistent, depending on the advisor handling the client.
- A short-term focus: Decisions are often driven by immediate needs and results, rather than long-term sustainability.
This reliance on the advisor’s individual capacity is a core constraint of the practice mindset. It’s a great starting point, but it’s not built for scale.
The Enterprise Mindset: Scaling for the Long Haul
The enterprise mindset means building a business that can thrive and scale, even when you’re not the only driver. It’s a shift in how you see your business. Here are nine thoughts to think about as you think about how to shift your mindset to break through & achieve more with your team:
- Delegation and Empowerment = Letting Go and Trusting Your People:
This is probably the hardest part. It’s difficult to give up control. Shifting your mindset from “I have to do it all” to “I need to empower others” is crucial. But scaling demands that you trust your team. And not just with the simple tasks, but by empowering them to make decisions and own their roles. Create clear roles, responsibilities, and decision-making authority. Invest in training – give them the skills they need to succeed. Your role becomes coaching, mentoring, and setting the strategic direction.
- Strategic Thinking = Thinking Years Down the Line:
Enterprise leaders think strategically, focusing on the long-term vision of the firm. They’re anticipating market shifts and developing proactive plans. They’ve shifted their mindset from short-term gains to long-term sustainability. They understand their organizational level and how it connects to their vision. Make time for strategic planning, develop a clear vision, mission, and values, and set measurable goals. It also means making data-driven decisions and constantly adapting to the changing environment.
- Building Systems and Processes = The Foundation for Growth:
An enterprise RIA is built on robust systems and processes. It ensures consistency, efficiency, and scalability. The mindset here is about creating predictable and reliable outcomes, regardless of who’s involved. This is where implementing a business operating system like EOS can be invaluable. These systems provide a structured framework for defining roles, setting priorities, tracking progress, and resolving issues. Consider documenting your workflows, standardizing procedures, and using technology to automate tasks. It creates a business that runs smoothly even when you are not there.
- Leading vs. Doing = The Advisor as CEO:
The transition requires you to evolve from a doer to a leader. This is a significant mindset shift: from individual contributor to orchestrator of a team. Shift your focus from day-to-day tasks to high-level strategic activities, such as vision setting, team building, and business development. Start thinking of yourself as the CEO, not just the advisor.
- Long-Term Vision = Thinking Beyond the Short Term:
Enterprise leaders have a clear long-term vision for their firm, extending beyond the next quarter or even the next year. Their mindset is focused on building something that endures, not just something that profits in the short term. It informs their strategic decisions and keeps them focused on building a sustainable business. Moreover, a clear vision helps attract top talent who want to be part of something bigger and allows your team to understand “where the puck is going,” enabling them to work together effectively. Employees want a leader who is leading them to “greener pastures” – a firm with a clear direction and purpose.
- Reinvesting in the Business = Navigating the “Valley of Doom”:
Here’s a tough one: many firms extract all the cash flow, leaving little for reinvestment. You simply won’t break through if you’re not willing to reinvest profits back into the business. Dan Seivert of Echelon Partners coined the term “Valley of Doom” because firms often stall around $500M-$600M AUM, facing the need for significant investments in people and technology. The enterprise mindset recognizes that this “valley” is a period of accepting lower margins to build infrastructure for future growth. Be prepared to accept lower margins for a period of years as you build the business. The payoff comes later, with expanding margins as you approach $2-$3 billion AUM.
- Equity Ownership = Sharing the Value, Literally:
A lot of founders hold on tightly to equity, fearing a loss of control. The scarcity mindset holds many back. The abundance mindset lets you share the reward and achieve greater success. However, strategically sharing equity can be a powerful tool for attracting and retaining talent, and motivating key employees to act like owners. Consider implementing phantom equity plans, profit-sharing programs, or even offering direct equity ownership to key employees. This creates alignment, fosters a sense of ownership, and empowers your team to contribute to the long-term success of the firm.
- Proactive Strategic Planning = Anticipating Market Changes:
Don’t just react to market changes; anticipate them. This requires a mindset of continuous learning and adaptation. Develop a proactive strategic plan that outlines your vision, goals, and strategies for growth. Regularly review and update your plan to ensure it remains relevant. This involves conducting market research, analyzing competitive dynamics, and identifying potential opportunities and threats.
- Accountability and Execution = Delivering on Your Plans:
A plan is useless without effective execution. The right mindset fosters a culture of ownership, responsibility, and follow-through. Establish clear metrics and KPIs to track progress toward your goals. Hold regular meetings to review performance, discuss challenges, and ensure accountability. Create a culture where everyone is responsible for achieving results.
Breaking Through: It All Starts with the Right Mindset
The shift from a practice to an enterprise mindset is not a one-time thing; it’s an ongoing process. It takes self-awareness and a willingness to change. But for RIAs looking to break through and build truly lasting firms, it’s worth the effort.
By embracing these mindset shifts, you can create a firm that is not only larger but also more resilient, more valuable, and more fulfilling for everyone involved. It’s about creating a firm that stands the test of time, leaving a legacy of success. It’s about moving beyond just being an advisor and building a business that can thrive for years to come. Work hard, and stay focused with an enterprise mindset.