PARTING SHOT

For RIA owners, the bigger question may be whether waiting five or 10 years to sell is worth the risk.

F YOU OWN AN RIA TODAY WITH $ 250 MILLION, $ 1 BILLION OR EVEN $ 5 billion in assets under management, you may be sitting on one of the best privately owned business models in America. And buyers know it. Think about what makes your business so attractive. Many RIA firms generate 90 % or more of their revenue from recurring advisory fees, something private equity investors specifically look for right now. And the client relationships at RIAs can last decades. Schwab’ s benchmarking data has shown the client retention rate hovering at around 97 % for years. Then there are the economics. A well-run advisory firm requires relatively little capital expenditure, produces substantial free cash flow and can grow simply because markets are rising, existing clients are adding money and new clients are walking through the door. Some highly efficient owner-operated firms can generate cash-flow margins of 40 %, 50 % or even higher, though normalized EBITDA margins are generally lower after adjusting for owner compensation. No factories. No inventory. No trucks. No raw materials. No wonder Wall Street has fallen in love with wealth management right now. Yet the question I hear increasingly from successful RIA owners isn’ t,“ Can I sell my firm?” It’ s,“ Why would I sell now if my business could be worth twice as much in 10 years?”

That’ s not a bad question. But there is a better one they should be asking as well: Will those big multiples still exist in a decade?

Everyone begins assuming today’ s valuation is the new normal. Until it isn’ t. RIA multiples in particular have several potential vulnerabilities.

A Golden Age Of Valuation

The numbers are remarkable. Quality U. S. RIAs are commonly selling at about 8 to 12 times EBITDA, with premium firms going significantly higher. Our M & A consulting firm, JPTD Partners, has seen figures go as high as 17 times EBITDA. We know that well-managed firms with around $ 5 billion in assets under management can reach 18 to 20 times, while fast-growing billion-dollar firms can command multiples in the high teens.

At the very top of the market, the numbers become eye-popping.

Take asset manager TPG’ s investment in Creative Planning. TPG reportedly valued the firm at more than $ 15 billion. Industry estimates suggested that the deal was more than 20 times the EBITDA valuation.

Investors’ desire for predictable cash flow from financial services firms is also apparent when you go to the public markets. In North America, wealth managers have recently been valued at around 20 times EBITDA in public-market and large-transaction comparisons. continued on page 58

60 | FINANCIAL ADVISOR MAGAZINE | JULY / AUGUST 2026 WWW. FA-MAG. COM