Sovereign Wealth Funds and the Future of Investment Advisory Deals

Mar 26, 2025

In this solocast episode, I’m diving into an important and evolving trend in the investment advisor space—the role of sovereign wealth funds. While this may seem like a niche topic, the underlying concepts—who the right investors are at various stages of an industry’s growth and maturation—apply across multiple sectors.

Sovereign wealth funds are making strategic moves in the investment advisory industry, and their involvement has significant implications for deal-making, valuations, and long-term industry trends. But what makes this sector attractive to them? And what should advisors and firms looking to sell or scale keep in mind when consdering these investors? Tune in for a deep dive into this timely and impactful topic!


INDUSTRIES FOLLOW A NATURAL GROWTH CYCLE—UNDERSTANDING IT UNLOCKS OPPORTUNITIES

Every industry evolves in predictable stages, and the independent registered investment advisor (RIA) space is no different. Initially, firms break away from larger institutions—like banks and trust companies—or launch as independent startups, growing organically by proving their business models and building a client base.

As the industry matures, acquisitions become more common, with larger firms integrating smaller ones through “tuck-in” deals. Capital becomes more accessible—15 years ago, it was difficult to secure lending for RIA acquisitions, but today, financing options are plentiful.

The next phase brings private equity (PE) investors, who accelerate consolidation by backing aggregators and serial acquirers. Firms like Mercer Advisors, Hightower, and Creative Planning have rapidly scaled with PE support. This growth pattern isn't unique to RIAs—it happens across industries. Recognizing where an industry is in its cycle helps businesses and investors anticipate opportunities and challenges before they arise.

CAPITAL FUELS GROWTH, BUT EVERY INVESTMENT HAS AN EXIT PLAN

Industry consolidation is driven by capital, but every investment comes with expectations. Early on, firms rely on self-funding or bank loans. As they grow, they attract minority investors, and eventually, private equity (PE) steps in, injecting larger sums—but with a timeline for returns.

PE firms typically exit within 5-7 years, selling to larger PE firms or institutional investors. In the RIA space, early PE investors backed aggregators, who later attracted even bigger investors, creating a cycle of ownership changes.

For business owners, securing outside capital isn’t just about funding—it’s about understanding the inevitable exit strategy, whether through resale, merger, or IPO. Recognizing these dynamics helps leaders plan for long-term success.

PRIVATE EQUITY CREATES A CYCLE OF BUYOUTS—WITH UNCERTAIN OUTCOMES

PE firms invest with a short-term goal: maximize returns within 3-10 years before selling to a larger PE firm, corporation, or institutional investor. This creates a constant cycle of buyouts and consolidations.

A clear example is United Capital, which took PE funding, then sold to Goldman Sachs—only for Goldman to later offload it to Creative Planning. This highlights a key risk: companies backed by PE must always plan their next exit. Without a solid strategy, they risk being forced into deals that don’t align with their long-term vision or, worse, facing financial instability.

BIGGER COMPANIES FACE FEWER EXIT OPTIONS—OFTEN LEADING TO IPOS OR SOVEREIGN WEALTH FUNDS

As companies grow and move up the private equity ladder, their exit options become more limited. Early on, they can sell to smaller PE firms, strategic investors, or even founders buying back shares. But at a larger scale, the choices narrow to three main paths:

  • Going Public – An IPO (Initial Public Offering) can provide liquidity but brings regulatory scrutiny, market volatility, and pressure from shareholders.
  • Selling to a Larger Entity – This could be a corporation, a massive private equity firm, or a conglomerate looking to expand its portfolio.
  • Attracting Sovereign Wealth Funds – Government-backed investment funds are increasingly stepping in as buyers for large firms that have outgrown traditional PE exits.


Fisher Investments avoided this by growing organically, maintaining control instead of relying on PE-driven exits. However, most investor-backed firms must eventually seek a major liquidity event. Sovereign wealth funds are emerging as an alternative, but whether they’ll reshape the market remains to be seen.

SOVEREIGN WEALTH FUNDS OFFER STABILITY FOR LARGE FIRMS

Unlike private equity, which demands quick returns, sovereign wealth funds (SWFs) invest with a long-term outlook, making them attractive partners for firms seeking stability. Funds like GIC (Singapore) and Mubadala (Abu Dhabi) favor financial firms for their steady cash flow over riskier tech startups.

For example, Mercer secured investment from GIC, enabling continued growth without the pressure of a forced exit. CI Financial, parent of Corient, sold stakes to Bain Capital and the Abu Dhabi Investment Authority before Mubadala took it private. These deals signal a shift—large firms are increasingly turning to SWFs as long-term capital partners instead of relying on private equity or public markets.

LARGER FIRMS FACE FEWER EXIT OPTIONS, TURNING TO SOVEREIGN WEALTH

As firms grow, their exit options narrow. Selling to another private equity firm, going public, or merging with a competitor becomes more challenging when billions are at stake. Many large firms are now turning to sovereign wealth funds for long-term stability.

A prime example is Corient’s parent, CI Financial, which first sold a 20% stake to Bain Capital and the Abu Dhabi Investment Authority. Later, Mubadala took CI Financial private, demonstrating that sovereign wealth funds aren’t just passive investors—they’re willing to acquire entire firms.

This trend suggests that firms looking for long-term stability may increasingly seek sovereign wealth backing rather than relying on public markets or traditional private equity. For business leaders, this means rethinking exit strategies early on—because as a firm grows, its options become more limited.

SOVEREIGN WEALTH FUNDS ARE BECOMING THE GO-TO INVESTORS FOR LARGE FIRMS

With IPO markets uncertain and private equity unable to compete financially, sovereign wealth funds (SWFs) are stepping in as major players. Managing trillions in assets, funds like Mubadala and the Abu Dhabi Investment Authority can easily make multi-billion-dollar investments.

For instance, Fisher Investments secured $3 billion from the Abu Dhabi Investment Authority and Advent International at a $12.75 billion valuation. Meanwhile, Mubadala took CI Financial private. These deals reflect a growing trend—large firms are turning to SWFs for capital instead of pursuing IPOs or private equity funding.

LARGE FIRMS ARE TURNING TO SWFS OVER MERGERS OR IPOS

With the IPO market currently unattractive, large firms are left with two main options:

  1. Seek investments from sovereign wealth funds or large institutional investors. These funds offer capital without forcing major operational changes.
  2. Merge with or acquire similar firms. However, mergers present significant challenges, including integrating management teams, systems, and cultures.


Given the complexity of mergers, many firms prefer taking capital from sovereign wealth funds, allowing them to maintain their existing leadership and strategy while continuing to grow. As a result, the financial industry is seeing an increasing number of these high-stakes SWF investments rather than firms attempting to navigate difficult mergers or uncertain IPO markets.

SWFS PROVIDE STABILITY AND GROWTH FOR INVESTMENT FIRMS

Sovereign wealth funds (SWFs) are reshaping the financial industry by offering patient capital, unlike private equity or venture capital, which demand quick returns. Firms like Fisher Investments, CI Corian, and Mercer have leveraged SWF funding to fuel long-term growth without pressure for immediate exits.

For example, Fisher Investments recently secured a $3 billion investment from the Abu Dhabi Investment Authority (ADIA) and Advent International, valuing the firm at nearly $12.75 billion. This kind of funding allows Fisher Investments to continue its expansion through acquisitions rather than having to seek alternative financing sources or rush into a public offering. Similarly, CI Corian and Mercer have also leveraged SWF capital to support their aggressive acquisition plans. By tapping into these large, state-backed funds, investment firms can maintain stability while pursuing expansion at their own pace.

FIRMS FACE LIMITED GROWTH OPTIONS, TURNING TO MERGERS, IPOS, OR SWF INVESTMENTS

With the IPO market still unstable, financial firms looking to scale are left with two main options: mergers or outside investments. While mergers can create industry consolidation, they come with challenges like integrating leadership teams, operational systems, and company cultures. For many firms, this makes sovereign wealth fund (SWF) investments a more appealing alternative.

SWFs provide long-term capital without forcing immediate returns or major structural changes. For example, Fisher Investments secured a $3 billion investment from the Abu Dhabi Investment Authority and Advent International, allowing it to continue expanding through acquisitions rather than relying on an IPO. Similarly, CI Corient and Mercer have leveraged SWF backing to fuel their growth strategies.

Looking ahead, firms will likely continue choosing SWF investments or strategic mergers as they navigate uncertain market conditions. While the IPO market could eventually recover, many companies prefer the flexibility and stability that SWFs offer.


Tune in to this episode to uncover how sovereign wealth funds are reshaping the investment advisory space, providing long-term stability, and influencing deal structures in mergers and acquisitions.

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Corey Kupfer is an expert strategist, negotiator, and dealmaker. He has more than 35 years of professional deal-making and negotiating experience. Corey is a successful entrepreneur, attorney, consultant, author, and professional speaker. He is deeply passionate about deal-driven growth. He is also the creator and host of the DealQuest Podcast.

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Corey Kupfer is an expert strategist, deal-maker, and business consultant with more than 35 years of professional negotiating experience as a successful entrepreneur and attorney.

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