While Norden likes to call technology an “equalizer” between large and small firms, it’s also a differentiator. While large and small firms will likely find ways to adapt to changing times and clients, mid-sized firms may feel squeezed out.

“Big firms can afford to buy themselves out of trouble and use technology after it’s been developed to comply with changing regulations,” Norden says. “Small firms are too small to afford a sophisticated technology strategy, but they can afford to innovate because they are small, they have fewer technological needs. Mid-sized firms have comparative disadvantages to both. They’re not large enough to buy themselves out of trouble, and they’re established enough to have a lot of human elements.”

In a typical mid-sized RIA, which may have around 30 employees with an average age of over 50, and clients that may skew even older, adaptation to new technology will be difficult, leading to further compression within the industry.

Norden predicts that mid-size firms will languish because their antiquated marketing techniques will fail to create organic growth, and that such RIAs will eventually collapse or be absorbed by larger companies.

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