RIAs Lose Up to 5% of AUM Annually, Report Finds

A Cerulli Associates report released last week found registered investment advisors lose roughly 2% to 5% of assets under management each year as older clients withdraw funds for retirement income or one-time expenses. More than half of RIA clients are age 50 or older and are entering a decumulation phase, Cerulli reports.

Clients who withdrew money to supplement income accounted for 56% of RIA asset outflows last year, according to the report. Those outflows and comparable departures are a primary driver of declines in firm assets, Cerulli says.

Firms have relied on organic growth-new assets from existing and prospective clients-to offset those losses. Between 2019 and 2024, RIAs recorded gross asset increases of about 10% to 11%. Excluding market appreciation, growth fell to approximately 3% to 4%, Cerulli found.

The report documents limited investment in marketing and referrals. RIAs devote about 5% of budgets to advertising and public visibility, only 51% proactively ask clients for referrals, and just 14% have a dedicated marketing resource. Cerulli also reports that senior advisors spend an estimated 20% of their time on portfolio management and about 7% on prospecting for new clients.

Industry marketing executives and advisors cited founder mindsets and legacy business models as reasons for low marketing spending. Joe Anthony, CEO of marketing firm Gregory, described a common founder response: “Hey, I got to be very successful. I got $2 billion under management without ever spending for professional marketing. Why do we need to do it now?”

Cerulli recommends that firms create dedicated internal teams or hire marketing specialists to manage referrals and outreach. The report advises refining public communications to address specific prospect groups rather than presenting the firm as a generalist, noting that generic messaging can make potential clients feel like “one of many.”

Smaller firms with constrained budgets can take lower-cost steps, Cerulli says. Targeted language on websites and social media can improve perception among desired prospects without large ad spending. The report highlights niche strategies, such as firms that focus on retirees relocating to particular states, which can generate word-of-mouth growth.

Firms are also encouraged to build relationships with heirs and beneficiaries. David Demming, founder of Demming Financial Services, cited his firm’s experience handling transfers to heirs and beneficiaries and noted that “what we have learned is to develop relationships with beneficiaries now, well before the death of parents and grandparents.” Demming’s firm distributes more than $25 million annually to retirees and beneficiaries.

Cerulli lists structured referral programs, targeted marketing, and multigenerational client engagement among the actions firms can take to address asset attrition related to client decumulation.