RIA Valuation Insights

A weekly update on issues important to the Investment Management industry

Call Reports Practice Management

Q3 2019 Call Reports

Differentiated Strategies of Asset Managers, Wealth Managers, and RIA Consolidators

During Q3 2019, most classes of RIA stocks underperformed major equity markets, which are having their best year, so far at least, in more than two decades. In general, base fees for RIAs were up due to higher average AUM (driven by market growth), however, each sector experienced unique challenges. As we do every quarter, we take a look at some of the earnings commentary from investment management pacesetters to scope out the dominate trends.


Acquisitions of Consolidators Continue to Drive RIA Deal Activity

Asset and Wealth Manager M&A Keeping Pace with 2018’s Record Levels

Through the first three quarters of 2019, asset and wealth manager M&A has kept up with 2018, the busiest year for sector M&A during the last decade.  Transaction activity is poised to continue at a rapid pace as business fundamentals and consolidation pressures continue to drive deal activity.  Several trends which have driven the uptick in sector M&A in recent years have continued into 2019, including increasing activity by RIA aggregators and mounting cost pressures.

Practice Management Wealth Management


The Best Business Model in the RIA Industry Depends Not on Who You Ask, but Who’s Asking

Earlier this month we had the pleasure of participating in a panel discussion on the value of wealth management firms in a transaction setting for the CFA Society of New York.  In conversation after the event, one of the audience members asked me what I thought was the most successful business model to follow in the wealth management space.  It’s a question we hear fairly often, and I try to avoid punting on the answer and saying “it depends.”  In reality, though, it does depend.

Industry Trends

Q3 2019 RIA Market Update

Asset and Wealth Management Stocks Languish in the Third Quarter

The asset and wealth management industry is facing numerous headwinds, chief among them being ongoing pressure for lower fees.  Traditional asset and wealth managers feel this pressure acutely, which has likely contributed to their relative underperformance over the last quarter.  Alt managers, which have been the sector’s sole bright spot during this time, are more insulated from fee pressure due to the lack of passive alternatives to drive fees down. These headwinds have contributed to a decline in EBITDA multiples for traditional asset/wealth managers, which in turn has resulted in lackluster stock price performance.

Alternative Assets

Alternative Asset Managers

Performance Update

In May of this year, assets in passively managed funds equaled assets actively managed for the first time in history.  As investors seek low-cost solutions, alternative managers are working to solidify their place in investors’ portfolios.  Despite the headwinds the asset management industry faces, most investors still value the diversification offered by alternative assets, particularly late in the economic cycle.  In this post, we take a closer look at how alternative asset managers are performing in light of the broader shift from active to passive management and increased fee pressure.

Practice Management

Transitioning Your Business to the Next Generation of Leadership

Successful Succession for RIAs

Continuing with our succession series, this week’s focus is on internal transitions.  If you’ve ever wondered why there aren’t more transactions in the RIA space, it’s largely because most of these businesses ultimately transition their ownership internally to younger partners at the firm.  These deals typically don’t get reported, so you probably don’t hear about most of them.  Still, it’s the most common type of transaction for investment management firms and probably something that’s crossed your mind if you’re approaching retirement.

Practice Management

Planning to Succeed

Succession is as often discussed as it is misunderstood.  While many practice management issues revolve around industry expectations, regulations, client expectations, and basic economics, succession involves all of those things plus personality, culture, and skill sets.  And while much has been written about succession in the RIA industry, we’ve seen plenty of topics get little, if any attention.  This post is dedicated to some of the latter.

Practice Management

Selling Your RIA to a Consolidator  

Successful Succession for RIAs

As we explained in a recent post, there are many viable exit options for RIA principals when it comes to succession planning.  In this post, we will review some of the considerations when partnering with an RIA consolidator. 

Practice Management

Partnering with a Minority Financial Investor

Successful Succession for RIAs

As we explained in a recent post, there are many viable exit options for RIA principals when it comes to succession planning. In this post we will review some considerations of partnering with a minority financial investor to achieve a successful transition of ownership.

Practice Management

Posturing for a Successful Succession

A recent Schwab survey asked RIA principals to rank their firm’s top priorities in the coming year.  We were disappointed but not surprised to discover that developing a succession plan was dead last. If you’re a founding partner or selling principal, you have a lot of exit options, and it’s never too soon to start thinking about succession planning. We’ll outline these options in this post and expound upon them in more detail later in the series.

Investment Management

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