RIA Valuation Insights

March 12, 2019 Wealth Management

What Wealth Managers Need to Know About the Income Approach

There are three general approaches to determining the value of a business: the asset-based approach, the income approach, and the market approach.  The three approaches refer to different bases upon which value may be measured, each of which may be relevant to determining the final value.  Ultimately, the concluded valuation will reflect consideration of one or more of these approaches (and perhaps several underlying methods) based on those most indicative of value for the subject interest. This week, we take a look at how the income approach is used to value wealth management firms.

March 4, 2019 Wealth Management

The Anatomy of a Wealth Management Firm

A Closer Look at a Business that Continues to Pivot with Client Needs

Wealth management firms have significantly evolved over the last several decades for various reasons. For purposes of this post, we provide a bit of history on the industry, basic characteristics of today’s wealth management firm, and take a look at recent performance.

February 25, 2019 Current Events

Warren Buffett and the Intrinsic Value of Investment Management

A Few Reflections on the 2019 Berkshire Hathaway Shareholder Letter

In a world where non-stop financial commentary is as commonplace as it is tedious, one man’s market insights get an unusual amount of attention: Warren Buffett’s annual shareholder letter.   Buffett is an ironic icon of the investment management industry.  He’s made his fortune from active investment management, but regularly articulates his skepticism of the same.  He’s doubtlessly inspired more people to found RIAs than any other individual, yet his firm, Berkshire Hathaway, is not an RIA.  And his annual treatise on the performance of his company is full of common-sense wisdom that, based on Berkshire’s track record, is anything but common.

February 18, 2019 Asset Management Industry Trends Wealth Management

What We’re Reading on the RIA Industry

Q1 2019

Much of the sector’s recent press has focused on the current market environment as well as practice management issues for RIA firms, so we’ve highlighted some of the more salient pieces on these topics and a few others that are making news in the investment management industry.

February 11, 2019 Current Events

Q4 2018 Call Reports

Volatility Drives Investors to Low-Fee Passive Strategies

As we do every quarter, we take a look at some of the earnings commentary of pacesetters in investment management to gain further insight into the challenges and opportunities developing in the industry.

February 4, 2019 Asset Management Current Events

RIP to the Father of Index Investing

John Bogle’s Legacy Endures with the Prominence of Passive Investing

This week we say goodbye to perhaps the greatest advocate of passive investing. John Bogle’s contributions to indexing strategies and ETF investing have had huge impacts on both active and passive management, which we’ll address in this week’s post.

January 29, 2019 Practice Management

Five Questions to Ask Your P&L

A Great Start to 2019 is a Thorough Lookback at 2018

Now that January is almost over, we know that many of you have wrapped up quarterly investor communications and can now take a moment to think about your firm’s operations, direction, and other practice management issues. A useful place to begin your plan for 2019 is doing some fundamental research on your own business, starting with the P&L.

January 21, 2019 Transactions

2018 Was a Banner Year for Asset Manager M&A

Asset manager M&A was robust throughout 2018 against a backdrop of volatile market conditions.  Several trends which have driven the uptick in sector M&A in recent years continued into 2018, including increasing activity by RIA aggregators and rising cost pressures.  Total deal count during 2018 increased 49% versus 2017 and total disclosed deal value was up nearly 140% to $18.0 billion.  In terms of both deal volume and deal count, asset manager M&A reached the highest levels since 2009.

January 14, 2019 Trust Companies

Trust Banks’ Performance and the Role of Technology

Trust banks have generally lagged the broader indices since the financial crisis of 2008 and 2009. Against a bearish backdrop for the industry, all three trust bank stocks declined in the last few months of the year with falling client asset balances and rising labor costs. Northern Trust and BNY Mellon performed more in line with the market and traditional banks while State Street’s underperformance is largely attributable to investor skepticism surrounding its purchase of Charles River Systems last summer.

January 7, 2019 Industry Trends

RIA Stocks Suffer Worst Quarter Since the Financial Crisis

Most Traditional and Alternative Asset Managers in Bear Market Territory After Turbulent Year for Global Equities

Following a decade of (fairly) steady appreciation, RIA stocks finally capitulated with the market downturn and growing concerns over fee compression and asset flows.  As a leading indicator, such a decline suggests the outlook for these businesses has likely soured over the last year or so.