RIA Valuation Insights

A weekly update on issues important to the Investment Management industry


Industry Trends

Volatile First Quarter Brings Asset Management Industry Headwinds Back Into Focus

Publicly traded asset managers had a rough first quarter, as volatility returned to the market and major indices posted negative quarterly returns for the first time in over two years.  While the overall drop in the market was relatively modest, stock price declines of publicly traded asset managers were generally more significant. It is not surprising that most asset managers have underperformed during periods of declining markets, since the reverse was true during 2017, when most asset managers outperformed the major indices.

Three Takeaways from the CFA Institute’s Wealth Management Conference in Los Angeles

Several topics were discussed at the CFA Institute’s Wealth Management Conference, most of which centered around financial planning, practice management, and servicing private clients with evolving needs and return requirements.  Though we weren’t able to attend all the sessions, we did pick up on a few themes from our discussions with the attendees and other exhibitors. In this week’s post, we further discuss those themes.

Current Events

What We’re Reading about the Tax Bill

Most of the sector’s recent press has focused on the tax bill’s impact on RIAs, so in addition to our own writings on the matter, we’ve highlighted some of the more salient pieces we’ve come across regarding the tax bill as it relates to the asset management sector.

2017 Was Especially Kind to the RIA Community

Favorable market conditions over the last year have lifted RIA market caps to all-time highs yet again as AUM balances continue to climb with the major indices. Is the press wrong about some of the problems facing the industry or is there more to the story?

Laissez Le Bon Temps Rouler! RIA Market Caps Peak Despite Headwinds

If you only followed the press surrounding asset managers, you’d think the entire industry was in serious trouble.  Fee compression, fund outflows, regulatory overhang, rising costs, and a host of other issues have dominated headlines in recent years, yet the market doesn’t seem to care.

Recent Trends in Asset Management

This week, we’re sharing some recent media on trends in asset management, including the breakaway broker phenomenon, M&A activity, and the ongoing shift towards passive products.

Options for Today’s Financial Advisors

Should I Stay or Should I Go?

Ever since the Financial Crisis, wirehouse advisors have been pondering this question as the independent model continues to lure wealth managers from the big banks and brokerage firms.  This post discusses the various options that financial advisors (FAs) are faced with today and when it makes sense for them to stick around or do their own thing.

Recent Trends in Asset Management

This week we’re sharing some recent media on trends in asset management and the outlook for M&A activity.  Most industry observers foresee an uptick in asset manager deal-making as rising costs, asset outflows, and a heightened interest from consolidators incent many firms to pull the trigger on a sale or business combination with another RIA. 

What’s Got Our Eye

Current RIA Trends

This week, we’re sharing some recent media on trends in the RIA space. We’ve blogged about asset flows, bank interest in the RIA space, the plight of active management, and the fiduciary rule, but these articles represent a deeper dive into each of these topics.

A Rising Tide Lifts All Boats

All Classes of Asset Managers Up Over the Last Year

All classes of asset managers are off to a decent start in 2017 after a strong end to 2016 as the market weighs the impact of fee compression against rising equity prices.

What’s Got Our Attention?

This week, we take a break in our musings on asset manager valuations and impractical sports cars to share some recent media on trends in the RIA space we’ve been following.

Alternative Asset Managers

IPO Supply and Demand

The stock market rallied in the first five months of the year, with the Dow Jones and S&P 500 reaching record highs and continuing to climb. Nevertheless, IPOs remain scarce compared to prior years.

Asset Management Trust Companies

Q1 Shows Glimmer of Hope for Active Managers and Continued Gains for Trust Banks

The First Quarter 2017 Asset Management newsletter has been released. This quarter’s newsletter focuses on the mutual fund sector, which has been plagued by asset outflows into ETFs and other passive strategies for most of the last decade. The first two months of this year do, however, offer a ray of hope as 45% of U.S. based active managers beat their relevant benchmark, resulting in February being the first month of inflows into active products since April 2015.

Excuse Me, Flo?

Inflows and Outflows Drive Disparity in Performance between Different Classes of Asset Managers

Immediately before ordering the Soup Du Jour and duping Sea Bass into picking up his lunch tab, Jim Carrey’s character in Dumb and Dumber, Lloyd Christmas, rudely accosts his waitress at the Truk-Stop Diner with this inexplicable reference to the early 1980s sitcom starring Polly Holliday as Florence Jean “Flo” Castleberry. Decades after the movie’s release in 1994, the market seems to be postulating the same question in pricing RIAs.

Investment Manager Pricing Takes the Scenic Route

Smaller public RIAs started and ended 2016 as a pack, but for about eight months performance was anything but similar. In what I can best describe as a wild ride to a close finish, at one point in July of 2016 Cohen & Steers (CNS) was up nearly 40% while Virtus Investment Partners (VRTS) was down over 30%. Seventy point divergences don’t happen very often, especially considering that, by Christmas of last year, the same spread narrowed to less than eight points.


RIA Deal-Making Was Flat Last Year but Poised to Surge in 2017

Despite a rocky year for asset manager valuations, sector M&A was still strong. Total transactions were down about 10% from 2015 while aggregate deal value increased close to 20%. Several themes from the prior year also persisted as wealth management acquisitions remained robust and banks continued to play a pivotal role on both the buy-side and the sell-side.

The Rise of Robo-Advisors

Part 2

As the second part to last week’s blogpost, the following section from Jay Wilson’s forthcoming book on FinTech describes ways to think about the valuation of robo-advisors, including some real world examples of technology based investment management platforms that transacted.

The Rise of Robo-Advisors

Part 1

Despite the potential for FinTech innovation within wealth management, significant uncertainty still exists regarding whether these innovations will displace traditional wealth management business models. In this two part blogpost, excerpted from our new book on FinTech forthcoming from Wiley in early 2017, we look at the potential of Robo-Advisors and offer some thoughts on valuation.

Investment Management

Mercer Capital provides RIAs, trust companies, and investment consultants with corporate valuation, litigation support, transaction advisory, and related services