By Steve Garmhausen

Much has been made of the wealth management industry's organic-growth struggles, with many registered investment advisor firms relying on the long bull market to grow the assets they manage. But why does that matter? For one thing, says Gary Roth, these firms' market value is subject to a factor outside their control. Another is that stagnating businesses don't attract talent, he says. "If you want a next-generation team that ultimately will allow you to retire and take great care of your clients, but the business is declining, they won't be motivated to be there," says Roth, a longtime executive at United Capital Financial Partners and Goldman Sachs who co-founded and is co-CEO of Modern Wealth Management, an acquisition-minded RIA firm with $11 billion in assets under management.

Speaking with Barron's Advisor, Roth says being in the acquisition market has provided firsthand confirmation of most firms' anemic organic growth. He explains how Modern Wealth, whose leadership is based in California and operations are anchored in Lenexa, Kan., has invested heavily in a lead funnel designed to get acquired firms growing. And he lays out the business's acquisition goals for 2026.

How did you get started in the industry? My first job out of college was at Newsweek magazine. This was in the early '90s when Newsweek had a circulation of about three million. I thought I wanted to be a journalist. Long story short, I wound up jumping into the nascent world of what were then called internet or web businesses, around 1995. We developed a niche capability of one of the first cloud computing firms, for financial services. It was an application we built at the behest of an insurance broker, taking legacy software and making it accessible over the internet. I did that for seven or eight years, and then through a series of events wound up being part of the start-up management team for United Capital starting in 2005. We were one of the first of the acquisitive firms building a national RIA business. I held a variety of C-suite roles at various points: COO, CFO, chief business officer. We sold to Goldman Sachs in 2019, and I remained with the firm until early 2022, when I left to ponder what I wanted to do next. Eventually I started chatting with a couple of former colleagues, Mike Capelle and Jason Gordo, about what it would look like if we started a new RIA. That led to the launch of Modern Wealth Management in the spring of 2023. We're a midsize firm at this point, with around $11 billion of AUM with 19 offices around the country, and we're continuing to grow, both by acquisition and organically.

Was the concept for Modern Wealth to bring something different to the industry? The goal wasn't to simply replicate what we had done in the past. All our planning was built around thinking about what experiences we wanted to bring to the new business and what we wanted to do differently, both in response to what had worked well and hadn't worked well.

What are the characteristics of your acquisition targets? We like the acquisition model in terms of a way to grow and add good people, geographic depth and breadth, and new capabilities. We've acquired firms that offer traditional planning and investment advice, but also firms that have tax planning and tax prep capabilities alongside that. We've acquired firms that have 401(k) and retirement-plan consulting services. We can then make those services available to all advisors and their clients.

One of our views from prelaunch was a bit contrarian. Back in 2022 we told potential investors -- it was literally on page one of our business plan -- you're going to want us to use the capital to acquire all of these great, organically growing firms. And we're going to tell you that we're not, for a couple of reasons. One, there aren't a lot of great organically growing firms. And two, if they are growing organically at very high rates, either they're likely going to be too expensive or they have no reason to sell. It was deliberately a bit provocative, but it's also true, and continues to be true in 2026. We're not necessarily looking for teams that are already growing at high organic rates. We're looking for teams that have the underlying desire and capabilities to grow, and for whatever reasons have gotten away from it. We want to partner with firms that are going to invest in organic growth.

You believe the RIA industry's struggles with organic growth are twofold. Please explain. The studies on this typically show anywhere from 2% to 4% organic growth on average, but the median would probably be substantially lower because a relatively small number of big firms really invest in growth. Firms that are just running their business and not making acquisitions experienced an organic growth rate of negative 2.7% from 2022 to 2024. Being in the slipstream of acquisition information, we see lots of data books, confidential information memoranda from bankers, etc., as does every other buyer. And it's all in that range. You almost never see anything above 5%.

I think a lot of it is driven by the demographics of the industry. The average advisor is in their late 50s. So the people who typically lead firms are that age or older. They're at a stage in their career where the question is what's going to motivate you to invest in growth? Because it does take an investment to do more than just pick up a few clients here and there. To grow sustainably there has to be systemic investment, a culture of growth, and team incentives for growth. So combine the age of the typical RIA leader with 17 years of mostly a bull market, and the fact that if you invest in growth your income will go down. Because things like marketing or hiring a business development person or buying leads costs money. And by the way, new clients are more work. At a certain point you've run out of all the natural referrals that are going to happen. Unless you're deliberately investing in growth you're not going to grow. It's as simple as that. Most RIAs don't even measure organic growth unless they are preparing to sell.

What's the argument for why these firms should invest in organic growth? That's up to each individual or team out there. There are lifestyle businesses out there that are doing pretty well, like what they're making, and are just willing to ride it out. There are a lot of challenges with that. One is that if you want a next-generation team that ultimately will allow you to retire and take great care of your clients, but the business is declining, they won't be motivated to be there.

A second reason is just value. The RIA business is a very transactional universe. There are a lot of buyers, and advisors who are clued into this -- which I think most are -- believe they'll be able to sell their business when they want to, for the prices they're hearing about from their friends. When things are very bullish, even firms that aren't growing are going to get a very nice price multiple. But if the music ever stops, if we have a bear market, revenues and profits will be down, and as Warren Buffett said, when the tide goes out, you'll see who's been swimming naked. If you have no ability to grow, financial health and continuity of your business are subject to all those external forces that you can't completely control.

A big part of Modern Wealth's value proposition is helping firms get their organic growth going. What are the levers you use to achieve that? Early on, we opened what we call our organic growth hub, which is an actual place. Our first one is in the Kansas City area, and we're planning on building a second organic growth hub in the Phoenix area. We staff this operation with people -- usually young future advisor candidates -- whose job it is to call prospects, gather information, and qualify them and set appointments with our advisors. We call them our organic growth concierges and concierge associates. We invested in bringing in leads from a bunch of different sources, and it's always evolving and growing. It includes paid leads, some digital marketing, some traditional marketing and advertising. We have podcasts, we have radio shows, and all of it generates leads. And if they're good fits, hopefully we turn them into clients. That's been our focus from day one, and we invest quite a bit into it.

How many acquisitions have you made so far, and what's your goal for the coming year? I believe we've completed 19 transactions. We set a target every year as part of our budgeting process. It's a competitive marketplace. You're almost always in a process where people are represented by investment bankers and there are multiple bidders. So you don't really know what you're going to accomplish. But in 2024 we completed eight transactions. In 2025 it was six. Our goal for this year is somewhere in that range, probably not fewer than four and probably no more than eight unless the right opportunities come up.

A cynic might read this interview and think, United Capital started out as a roll-up firm. What does this team of United Capital alumni know about organic growth? I probably have more to say about that than you could possibly fit in any one publication. When we started United Capital, there were lots of different brands. But over time, we realized that wasn't a great creator of value, so we became one brand. We attempted to have one client service model and unified offering and all that stuff. We did focus on organic growth. We developed that focus over almost 15 years between inception and when Goldman bought the firm. By the time we joined Goldman Sachs, we very much had a focus on organic growth, and we had pretty good organic growth. We learned over the years that if you don't invest centrally, and you don't provide some coordinating function, and if you aren't stimulating organic growth as an acquirer, then it's just going to be what the local firms were doing before they joined you. And on average, that's probably not going to be good enough to grow a firm at the rates that are needed now in the private equity-backed world. I think we learned everything we

(MORE TO FOLLOW) Dow Jones Newswires

February 06, 2026 08:10 ET (13:10 GMT)

Copyright (c) 2026 Dow Jones & Company, Inc.