RIA Valuation Insights

A weekly update on issues important to the Investment Management industry

Practice Management

Seven Considerations for Your RIA’s Buy-Sell Agreement

Working on your RIA’s buy-sell agreement may seem like a distraction, but the distraction is minor compared to the disputes that can occur if your agreement isn’t structured appropriately.  Crafting an agreement that functions well is a relatively easy step to promote the long-term continuity of ownership of your firm, which ultimately provides the best economic opportunity for you and your partners, your employees, and your clients.

If you haven’t looked at your RIA’s buy-sell agreement in a while, we recommend dusting it off and reading it in conjunction with the discussion in this post.

Practice Management

Being Human: The Secret to Authentic Advisor Videos

Guest Post by Megan Carpenter of FiComm Partners

Over the years, we have repeatedly said that the wealth management side of the investment management business is healthier than the asset management side.  Unlike asset managers whose clients are likely to jump ship after a few bad quarters, wealth management is based on client relationships and a manager’s ability to inspire confidence in his or her clients.   

Wealth managers spent their careers perfecting in-person communications to connect with clients.  2020’s transition to WFH made most of these communications virtual.  In this guest post, Megan Carpenter provides tips to improve your Zoom communication skills with clients.

Industry Trends

What Does “The Market” Say Your RIA Is Worth?

GameStop Theory in a Consolidating Industry

Long before Reddit investors discovered that you could Occupy Wall Street more effectively with out of the money call options than you can with tents, Porsche briefly turned itself into a hedge fund and used a similar tactic to try to take over Volkswagen.  The story sheds some light on how market pricing does, and does not, reveal the value of a business.  Benchmarking the value of an RIA off the behavior of a few aggressive consolidators has similar limitations.

Industry Trends

RIA Industry Extends Its Bull Run Another Quarter

Continuation of Market Rebound Drives All Categories of Publicly Traded RIAs Higher in Q4 2020

Share prices for publicly traded investment managers have trended upward with the market since March’s collapse.  Aggregators fared particularly well over the last nine months on low borrowing costs and steady gains on their RIA acquisitions.  Traditional asset and wealth managers have also performed well over this time on rising AUM balances with favorable market conditions. Against this backdrop, we discuss recent market performance, implications for your RIA, and a potentially improving outlook.


Playing the Match Game: Finding the Perfect Fit Between Buyers and Sellers

Guest Post by Louis Diamond of Diamond Consultants

For both buyers and sellers, knowing where your firm fits into the RIA M&A landscape is an important first step towards identifying compatible transaction partners.  The universe of RIA sellers can be categorized based on firm culture, the motive behind the transaction, management’s expectations for post-transaction roles, liquidity needs, the status of next-generation management, and the like.  As RIA transactions have proliferated in recent years, several different buyer profiles have emerged that address the concerns of these different seller types.  In this week’s guest post, Louis Diamond of Diamond Consultants identifies four common buyer profiles and the types of sellers that fit well with each.

Asset Management

Small/Mid-Sized Asset Managers Can Stay Relevant

Asset Management Industry Outlook

Over the last decade, investors have generally earned a higher net return by investing in passive vehicles rather than actively managed funds. Passive market share is now greater for U.S. equity investing than active. While large asset managers (i.e. BlackRock), are protected by sheer scale, how do small/mid-sized asset managers stay relevant in this environment?

COVID-19 Coverage Industry Trends

Silver Linings: Using Crisis to Improve Your RIA’s Health

Guest Post by Matt Sonnen of PFI Advisors

Early in the COVID pandemic, PFI Advisors published an article outlining how RIAs could perform an “Operational Diagnostic” to improve their profitability.  Matt Sonnen wrote, “For now, advisors are focusing on exactly what they should be doing – guiding their clients through this turmoil and keeping them calm and focused on their long-term financial goals.  When the time is right, however, I’ll forward this article to our clients so they can begin the work of focusing on the bottom line…”

Nine months later, most RIAs and their clients have recovered from the market volatility and ended up having a very good year, at least on paper.  Now’s the time for RIA principals to consider how they can advance their firms to be ready to meet the next challenge with greater ease.

We’re featuring Matt Sonnen’s wisdom on operational best practices and business strategy in our upcoming conference, RIA Practice Management Insights, on March 3 and 4. 

Current Events Transactions

Q4 2020 RIA Transaction Update

Deal Activity Rebounds After Brief Lull; Deal Terms and Multiples Remain Robust

After a brief lull during the second quarter of last year, RIA deal activity surged in the fourth quarter, rounding out a record year in terms of reported deal volume.  Concerns about the pandemic and market conditions were quickly shrugged off, as deal terms and the pace of deal activity returned to 2019 levels after the brief pause at the peak of the shutdown. 

Practice Management

Announcing the Inaugural RIA Practice Management Insights Conference

Professionalizing the Business of Investment Management

We are excited to announce that we are putting together a virtual conference for RIAs that is focused entirely on operational issues – from staffing to branding to technology to culture – issues that are as easy to ignore as they are vital to success. The RIA Practice Management Insights conference will be a two half-day, virtual conference held on March 3 and 4.

Investment Management

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