May / June 2026 • www. fa-mag. com

HE TWO BIGGEST TRENDS INFLUENCING THE FINANCIAL advisory world these days are the generational transition of businesses from founders to younger advisors and the entry of private equity firms into the space as major owners of big RIA firms.

It goes without saying that the two trends are closely interconnected. Without private equity investors, the first generation of RIAs wouldn’ t be able to realize the full value of their firms.

As Financial Advisor’ s May-June cover story about young advisors shows, many of them are just as entrepreneurial as the first generation was— they’ re finding their own way and thriving. But they are also structuring their relationships with clients in very different ways.

Private equity has fallen head-over-heels for the RIA universe in a major way. A big reason is the lucrative AUM fee model which, when coupled with 95 %- plus client retention rates and strong financial markets, produces remarkable financial returns.

Many of today’ s young advisors are indeed using the AUM compensation model, but they’ re also employing subscription models for younger clients who have significant incomes but don’ t yet have the assets to meet the minimums of big RIAs. Whether these clients will accept the AUM fees as they accumulate wealth remains to be seen. If they don’ t, or if financial markets encounter an extended rough patch, the industry may lose its luster for private equity.

Misconceptions abound when it comes to the younger generation. Many older advisors view them as slackers without the drive to launch their own firms. But trying to compartmentalize an entire cohort is a fool’ s errand. One young advisor in this month’ s cover story, James Conole of Encinitas, Calif., says he got fired in 2017, but then went on to launch Root Financial, which is now managing $ 2 billion.

Yet conversely, there are stereotypes about private equity too— that those firms are only interested in slashing expenses, milking a firm’ s cash flow and flipping it

Many of today’ s young advisors are indeed using the AUM compensation model, but they’ re also employing subscription models for younger clients who have significant incomes but don’ t yet have the assets to meet the minimums of big RIAs.

KNOWLEDGE FOR THE SOPHISTICATED ADVISOR

2026 Young Advisors To Watch

Young advisors today have very different attitudes about money, just like their clients do.

to another PE investor as fast as possible to get a high return. But the smart PE-backed firms know they will need to find ways to retain clients and advisors in a world where non-compete agreements are losing their enforcement powers.

That’ s why they are adding tax preparation, estate planning, concierge health and cybersecurity services. An advisor or especially a client considering the transfer of all that personal information is likely to think long and hard before jumping firms in the future.

Finally, there is another problem facing advisors, private equity, banks and whoever invests in this business: The demand for good financial advice greatly exceeds the supply of advisors, and there are only a number of hours in the day.

Yes, advisors are using AI to“ scale” their firms and grow, but there is always going to be a limit on how much work any individual can perform. If they are trying to help clients achieve financial independence and a quality life, they should also enjoy it themselves.

Evan Simonoff

Email me at esimonoff @ famagazine. com with your opinion.

8 | FINANCIAL ADVISOR MAGAZINE | MAY / JUNE 2026 WWW. FA-MAG. COM

James Conole Founder & CEO Root Financial

The Greatest Risk In Succession Planning

Transferring ownership takes a toll on clients and staff.

Understanding Box Spread Loans

Are they right for your clients?

When Clients’ Retirement Plans Change Direction

Adapting to retirement takes longer than people think.