Key Takeaways

• Margin pressure in 2025 led to stronger, more efficient firms. Rather than eroding profitability, rising costs pushed RIAs to sharpen operations, embrace scalable tech, and reinforce financial discipline—positioning many for healthier margins heading into 2026.
• AUM growth rewarded firms with strong client relationships. Market tailwinds helped, but organic growth came from diversified clients, planning-led strategies, and high retention, factors that continue to support premium valuations in 2026.
• Succession, M&A strategy, and AI adoption remain long-term value drivers. Leadership transitions, disciplined dealmaking, and thoughtful AI integration became defining industry themes that will shape firm valuations and competitive positioning in the coming year.

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As you’re probably still working through your Thanksgiving leftovers this weekend, we thought this post should be similarly focused on the lingering trends in the RIA space that will likely endure in the coming year. This week offers a natural moment to pause, look back on the year, and reflect on what we’ve gained, and we believe several themes from 2025 will carry meaningful value into 2026. The past year brought its share of challenges, but it also affirmed the underlying strength and adaptability of the investment management industry.

Below, we highlight the year’s “leftovers”, the insights and industry dynamics that will continue nourishing the sector’s momentum as we move into 2026.

1. Margin Pressure Highlighted Opportunities for Operational Strength

While many firms felt the pinch from rising compensation, elevated technology spend, and growing client expectations in 2025, the story was not one of erosion—it was one of renewed focus. Firms doubled down on efficiency initiatives, embraced scalable processes, and adopted technology that will ultimately enhance long-term profitability.

From a valuation perspective, 2025 made it clear:

• Firms that invest smartly outperform those that simply spend.
• Enhanced tech capabilities are becoming a competitive advantage, not just a line item.
• Teams that adapt quickly are building healthier, more resilient margins.

Buyers became more discerning, but that worked in favor of firms that proactively strengthened their financial footing. Heading into 2026, many firms are emerging leaner, sharper, and better positioned for growth.

2. AUM Growth Reinforced the Value of Quality, Not Just Quantity

Market performance provided a solid lift to AUM for most of 2025, but the real story was the durability and stability of client relationships. Firms with strong client engagement and consistent planning-led strategies saw healthy organic inflows.

The most encouraging trends carrying forward include:

• More diversified client bases, reducing concentration risk.
• Stronger alignment of fee structures with value delivery.
• Steady expansion in planning, advisory, and holistic wealth management services, which strengthen retention and revenue stability.

In 2026, firms that pair AUM growth with high client retention and differentiated service models will continue to command premium valuations.

3. Succession Planning Remains the Industry’s Most Persistent Leftover

If there is a perennial leftover in the RIA world, succession planning is it. 2025 saw continued turnover among founders and first-generation principals, especially at firms founded in the late 1990s and early 2000s. At the same time, younger owners increasingly expect transparent economics, defined career paths, and authentic participation in management.

This has several implications for valuation:

• Internal transactions continue to rise. Many firms are choosing controlled, staged ownership transitions over outright external sales
• Financing is becoming more creative. Seller financing, unit-based compensation plans, and multi-year earn-ins are becoming standard tools.
• Demographics are destiny. Firms without next-generation leaders in place face valuation discounts tied to continuity risk.

As we head into 2026, firms that invest early in leadership development and ownership pathways will enjoy smoother, and more valuable, transitions than those scrambling to catch up.

4. Deal Activity Was Disciplined but Forward-Moving

Rather than slowing, the RIA M&A market in 2025 became more strategic and purposeful. Buyers focused on integration readiness, cultural alignment, and sustainable economics, leading to healthier, more thoughtful transactions.

Some encouraging leftovers for 2026:

• Structured deals increased flexibility for both buyers and sellers.
• Cultural alignment became a headline priority, supporting smoother post-closing transitions.
• Smaller and mid-sized firms found more pathways to partner, including minority investments and strategic affiliations.

Overall, the market demonstrated depth, resilience, and creativity, positive signs for continued M&A engagement in 2026.

5. AI Adoption Showed Measured Progress With Big Long-Term Upside

Artificial intelligence was top-of-mind in 2025, and while its immediate impact on margins remained modest, firms made meaningful strides in implementation. AI is increasingly being integrated into research, marketing compliance, client service, and workflow automation.

Here’s the takeaway from the industry’s recent foray into AI related investments:

• Firms are laying the groundwork for substantial future efficiency gains.
• Scalable platforms are emerging, benefiting firms of all sizes.
• Buyers began rewarding strong tech infrastructure as a forward-looking valuation asset.

In 2026, the firms that continue experimenting, learning, and integrating responsibly will be the ones best positioned to convert AI investment into measurable economic value.

6. Regulatory Trends Encouraged Stronger Firms

The regulatory environment remained active but stable in 2025. Rather than novel rules, firms focused on strengthening their internal processes, improving documentation, and enhancing compliance culture.

These efforts have long-term valuation benefits:

• More consistent oversight builds trust with clients and counterparties.
• Well-structured compliance programs reduce risk premiums in valuations.
• Firms that invested in compliance infrastructure positioned themselves for scalable growth.

In short, 2025’s regulatory pressure nudged firms toward operational maturity that will serve them well in 2026.

Conclusion: A Strong Foundation for 2026

The investment management industry enters 2026 with fresh momentum. The leftovers of 2025, margin discipline, stable AUM growth, stronger succession planning, strategic dealmaking, well-paced AI adoption, and healthier compliance cultures, are not burdens. They are building blocks for continued growth.

Thanksgiving leftovers often become some of the best meals of the week, reimagined into something even more satisfying. In the same way, the lessons of 2025 offer firms a valuable foundation to build on. With resilient business models, deepening client relationships, and continued strategic investment, many firms are poised for an encouraging and opportunity-rich 2026.

About Mercer Capital

Mercer Capital’s investment management industry group provides valuation, transaction, litigation, and consulting services to a client base consisting of asset managers, wealth managers, independent trust companies, broker-dealers, PE firms and alternative managers, and related investment consultancies.