When Compliance Gets Compromised: The Private Equity Problem Facing RIAs

Since the onset of the Covid pandemic in 2020, the registered investment adviser (RIA) space has seen explosive growth—and private equity (PE) took notice. Recognizing the steady revenue and scalable business model of compliance consulting firms, PE firms began aggressively acquiring these vendors.

At first glance, it seemed like a win for the industry: more capital, more resources, and the promise of operational scale. But four years later, many RIAs are dealing with unintended consequences—and they aren’t happy.

The Shift From Service, To Scale

Before 2020, most compliance consultants operated like small, privately-held businesses. They understood the unique challenges of RIAs and did their best to provide personalized service. Post-acquisition, however, many of the same firms have shifted focus from client service, to profit margins. PE backing often comes with aggressive growth targets, and the result is a "volume-over-value" model that can leave advisors exposed.

RIAs are reporting:

• Longer turnaround times for crucial filings and audits.
• Increased pricing with no improvement (and often a decline) in service quality.
• High employee turnover leading to a lack of continuity and knowledge about the firm's history or business model.
• Cookie-cutter solutions that overlook the nuanced compliance needs of niche practices.

Compliance Is Not A Commodity

Compliance isn't like office supplies—you can't just plug in a one-size-fits-all solution and expect it to keep you protected. Yet PE-backed vendors are increasingly offering generic templates and mass-market tech platforms with limited human oversight.

This becomes especially dangerous during SEC examinations or in the event of a regulatory issue. Advisors who thought they had everything in place suddenly find that their firm has been miscategorized, their disclosures are outdated, or critical updates have been missed entirely.

Advisors Are Paying More, Getting Less—and Taking on More Risk

What used to be a strategic partnership has, in many cases, turned into an overpriced subscription model with limited accountability. The irony? Many RIAs sought these firms for the specific purpose of reducing their regulatory risk—and they’re now feeling more exposed than ever.

It’s not just about the checklists anymore—it’s about how responsive, flexible, and truly knowledgeable your compliance partner is. In an era of heightened regulatory scrutiny, especially around marketing, AI, and cybersecurity. A surface-level approach just won't cut it.

What can RIAs do?

1. Reassess your current compliance vendor. Are you receiving proactive guidance, or are you managing the vendor more than they’re managing your risk?
2. Ask the tough questions. Who owns the company? What are their priorities? What’s the experience level of the person assigned to your account? 
3. Explore independent alternatives. Boutique firms (like AdvisorLaw) that haven't taken PE money may offer more stable, client-first service models.
4. Look for attorney-backed compliance support. A vendor who can defend your decisions with legal authority—not just templates—offers added protection.

A Final Word

As the RIA world continues to evolve, so too should your compliance strategy. If your current vendor isn’t delivering the expertise, attention, and peace of mind you need, it may be time to reconsider your options. AdvisorLaw believes that compliance is too important to outsource to a firm more interested in appeasing investors than protecting your practice.

Ready to talk to a compliance team who works for you, not for Wall Street?

Contact our team below for a complimentary consultation.