If you haven’t noticed, the biggest RIA firms have been getting even bigger over the past decade. There’s been significant consolidation, with larger firms acquiring small independent RIAs. Fidelity recently estimated that more than 500 wealth management firms now have more than a billion dollars each in assets under management, and the trend appears to be continuing for the foreseeable future.

It’s no big surprise. The old saying that “two can live as cheaply as one” also applies to RIA firms. Consolidation through mergers and acquisitions allows firms to cut the cost of doing business by combining technology, support staff, marketing and other overhead costs. Business combinations often make it easier to provide more services to existing clients, whether by adding new product lines or a partner with specialized expertise.

If you’re committed to staying independent, you need to perform a serious analysis of your firm’s strengths and weaknesses. After all, you’re facing increased competition from all those larger firms. You may want to seek opportunities to build referral partnerships with noncompeting RIAs in your market, or choose to focus on a business niche that others have neglected.

At the very least, it’s time to sit down with your trusted advisors and sketch out a plan for the next few years of your business. While most people associate business plans with start-ups or companies in search of financing, they also provide an excellent opportunity to stop and take stock of where your business is, where you hope to be, and how to connect the two.

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