RIA Valuation Insights

October 21, 2019 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.

October 15, 2019 Alternative Asset Managers

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.

October 8, 2019 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.

October 2, 2019 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.

September 16, 2019 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. 

September 9, 2019 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.

September 3, 2019 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.

August 26, 2019 Transactions

Purchase Accounting Considerations for Banks Acquiring Asset Managers

As banks of all sizes seek new ways to differentiate themselves in a competitive market, we see many banks contemplating the acquisition of an existing asset management firm as a way to expand and diversify the range of services they can offer to clients. Transaction structures between banks and asset managers can be complicated, often including deal term nuances and clauses that have significant impact on fair value. Asset management firms are unique entities with value attributed to a number of different metrics (assets under management, management fee revenue, realized fee margin, etc.). It is important to understand how the characteristics of the asset management industry, in general, and those attributable to a specific firm, influence the values of the assets acquired in these transactions.

August 20, 2019 Practice Management

How Does Your RIA Measure Up?

Schwab’s 2019 Benchmarking Study Offers Insights Into the RIA Industry

Schwab recently released its 2019 RIA Benchmarking Study.  The survey contains responses from over 1,300 RIAs that custody their assets at Schwab to questions about firm operating performance, strategy, and practice management.  The survey is a great resource for RIA principals to see how their firm’s performance and direction measure up against the average firm.  We’ve highlighted some of the key results from the study in this week’s post.

August 12, 2019 Industry Trends Transactions

What We’re Reading on the RIA Industry

M&A Headlines

Recent press in the RIA industry has continued to highlight the current M&A environment. For this post, we’ll discuss some of the top acquisition headlines making news in the investment management industry.