How Are High Net Worth Individuals Investing?

High net worth (HNW) individuals are increasingly allocating a greater share of their assets to independent Registered Investment Advisers (RIAs) and fee-only firms, moving away from traditional wirehouses and brokerage models. This shift is driven by a desire for greater transparency, a commitment to the fiduciary standard, and a demand for more comprehensive, holistic wealth management services.

 

HNW investors aren't just looking for investment advice; they are seeking a trusted partner to manage all aspects of their complex financial lives. The data clearly shows that the independent, fee-only model is winning the race for the wealthiest clients.

The Growing Preference for Independent Fiduciary Advice

The most significant trend in HNW investing is the migration of assets from brokerage firms to independent RIAs. This move reflects a strong client preference for the fiduciary duty and a compensation structure that eliminates the conflicts of interest caused by security commissions.

 

Data Supporting the Trend

The data illustrates a clear pattern of growth for the independent channel, especially among the wealthiest segments:

Growth in the Ultra-High-Net-Worth (UHNW) Segment: From 2016 to 2022, relationships with clients holding over $10 million in assets grew 13 percent annually in the RIA channel, compared to 8 percent for wirehouses and private banks. This shows the independent model is winning the race for the wealthiest clients. (Source URL: https://www.mckinsey.com/industries/financial-services/our-insights/us-wealth-management-amid-market-turbulence-an-industry-converges)

 

Faster HNW Growth Rates: Over the five years ending in 2022, RIAs and hybrid RIAs saw growth rates with HNW clients that exceeded those of the larger traditional broker-dealers. (Source URL: https://wealthsolutionsreport.com/2024/10/21/how-rias-can-compete-with-wirehouses-for-hnw-clients/)

 

Advisor Migration and Market Share Shift: The change is so pronounced that wirehouses' market share of industry assets is projected to decline to approximately 27.7% by 2027, a significant drop from their over 50% market share in 2005. (Source URL: https://aldeninvestmentgroup.com/blog/why-financial-advisors-are-leaving-their-wirehouses-to-be-rias/)

 

Why HNW Clients Choose Fee-Only RIAs

 

HNW investors are sophisticated consumers who understand the complexities of financial advice compensation and regulation. Their preference for fee-only RIAs stems from three core principles:

1. Elimination of Conflicts of Interest: A fee-only advisor is paid only by the client, typically through a percentage of assets under management or a fixed fee. This structure ensures the advisor has no financial incentive to recommend a product that pays a higher commission, unlike a commission-based advisor. For high-stakes decisions regarding substantial wealth, HNW individuals demand advice that is objective and solely focused on their best interest. (Source URL: https://team.monetagroup.com/what-is-a-fee-only-fiduciary-advisor-and-why-does-it-matter/)
2. Fiduciary Standard Commitment: Unlike many traditional brokers who are held to the lower "suitability standard," RIAs are legally bound by the higher fiduciary standard to act with the utmost care, skill, and prudence, placing the client's interests first. This commitment builds a deeper foundation of trust, which is crucial when managing significant wealth.
3. Holistic Wealth Management: Today’s HNW client wants a "one-stop shop" that moves beyond simple investment management. They require comprehensive guidance on tax optimization , charitable giving , complex estate planning, and risk management. Independent RIAs have the flexibility and incentive to offer this holistic approach, which deepens the client relationship and enhances value. (Source URL: https://haloinvesting.com/fee-only-advisors-growing-your-business-with-insurance-annuities-in-2025/)

BSG Advisers - An Independent RIA

The clear trend is toward independence, transparency, and a commitment to the fiduciary standard. BSG Advisers is an Independent Registered Investment Adviser (RIA) that embraces this modern approach to wealth management. We are dedicated to providing fee-only financial planning and wealth management to ensure our advice is always objective, transparent, and aligned with your best interests.

 

Ready to align your wealth management with the highest fiduciary standards?

Reach out to us today for a free initial meeting to discuss your financial goals and how our independent, fee-only structure can serve your complex needs.