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The following article examines valuation multiples for registered investment advisor (RIA) firms as of 2024, based on data gathered from our SF Index and available third-party sources. The tables below outline the multiples proper, while the sections that follow take a deeper look into factors affecting RIA valuations as well as market conditions moving into Q4 of 2024 and into 2025.
EBITDA Multiples for RIAs
RIA Type | EBITDA | ||
Small (~$1M) | Midmarket (~$5M) | Large (~$25M) | |
Institutional | 5.1x | 6x | 7.1x |
Investment Management-Only | 4.9x | 5.8x | 7.2x |
Niche | 5.7x | 6.8x | 8.1x |
Retirement Plan Advisors | 4.8x | 5.7x | 7x |
Wealth Management | 5.4x | 6.3x | 7.5x |
Revenue Multiples for RIAs
RIA Type | Revenue | ||
Small (~$3M) | Midmarket (~$15M) | Large (~$50M) | |
Institutional | 3x | 3.4x | 3.7x |
Investment Management-Only | 2.5x | 2.8x | 3.2x |
Niche | 2.9x | 3.2x | 3.5x |
Retirement Plan Advisors | 2.7x | 3.3x | 3.9x |
Wealth Management | 2.8x | 3.3x | 4x |
Assets Under Management (AUM) Percentages for RIAs
RIA Type | AUM | ||
Small (~$100M) | Midmarket (~$500M) | Large (~$5B) | |
Institutional | 1.2% | 1.6% | 2.1% |
Investment Management-Only | 1% | 1.4% | 1.9% |
Niche | 1.3% | 1.7% | 2% |
Retirement Plan Advisors | .9% | 1.4% | 2.1% |
Wealth Management | 1.1% | 1.6% | 2.3% |
It should be repeated here again that the figures in the tables above represent averages for RIAs of different sizes – individual deal data can vary under or over these averages. The following sections outline factors affecting these individual deals, including fee structure, client demographics, and growth potential.
By Fee
The following table outlines just a few key takeaways about various fee structures commonly found in RIAs as they apply to M&A transactions. In cases of revenue consistency and retention risk, we should note that these categories refer to how the prospective buyer might see a firm with this payment structure, not necessarily how well they actually perform.
RIA Fee Structures in M&A
Ideal Buyer Type | Revenue Consistency | Retention Risk | Overall Effect on M&A Transactions | |
AUM Fee | Larger financial buyer | High | Low | Positive: Predictable and recurring revenue increases valuation |
Hourly | Small strategic buyer | Low | High | Neutral: Depends on scale and consistency of revenue |
Flat | Financial planners/ family office | Moderate | Moderate | Positive: Fixed revenue streams increase valuation stability |
Performance | Private equity groups | Low | High | Mixed: Can be attractive but introduces variability and risk |
Commission | Strategic buyers | Low | High | Negative: Commission-based models can lower multiples due to conflicts of interest |
Because of the stability that is often associated with AUM fees, buyers tend to see RIAs with this payment structure as a more favorable prospect. It should be noted that performance and commission-based RIAs can actually be more favorable to a prospective buyer, assuming that key staff members have agreed to stay on following the transaction.
Client Demographics
The largest deciding factor a buyer considers during an RIA valuation is whether they are servicing:
“HIgh Net-Worth” (HNW) clients: Clients with $1M+ in assets. Typically, an RIA needs a smaller number of these to work.
“Mass affluent” clients: Clients with $100,000 to $1M in assets. Typically firms specializing in this client type have a larger pool of clients in order to make up the difference with HNW accounts.
How these client demographics affect RIA valuations really depends on what the buyer is looking for, as indicated by the table below.
HNW vs. Mass Affluent: Pros & Cons
Pros | Cons | |
HIgh Net-Worth Clients | Higher AUM | Less scalability |
Less need for admin support since fewer clients | Greater risk of client concentration | |
Mass Affluent Clients | Diverse revenue streams | Lower AUM |
Greater scalability | Lower Revenue |
An RIA’s acquisition strategy can also affect their value in the eyes of a prospective buyer. For example, an HNW firm with a dedicated sales team following an established account-based marketing (ABM) campaign is more likely to have a high RIA valuation multiple, despite the inherent client concentration issue in that model.
Growth Potential
Although buyers look at several factors affecting the growth potential of an RIA, the biggest element is the balance between your organic (e.g., growth from relationships with existing and new customers) and inorganic growth (e.g., growth from acquisitions, mergers, or partnerships with other RIAs).
Ideally, buyers want to see high organic growth, as it indicates a higher degree of quality and customer satisfaction that will facilitate a transition. That amount does change, however, as the size of an RIA increases:
Organic vs. Inorganic Growth: RIA Benchmarks
Small | MidMarket | Large |
 |  |  |
By the time an RIA reaches enterprise status, they have access to a steady enough revenue stream that buyers are likely to be less concerned with organic growth (they still want a healthy amount of it, to be sure) and more concerned with larger figures like overall AUM and revenue.
Market Trends & Forecast
For the last several years, RIAs have been winning an uphill battle against the rise of robo-advisors who have effectively increased their need to provide an increasingly greater degree of service. As of 2023, the market remains strong with RIAs of every size seeing moderate growth from their pre-pandemic numbers, as shown below:
EBITDA Multiples for RIAs: 2020-2024
As is the case in many other industries, the RIA M&A market is robust but growing increasingly more complicated. As our team looks to the future, we have made the following predictions of what to expect:
Increasing regulatory attempts will increase deal duration. As recently as May 2024, the SEC has proposed several pieces of legislation that would force RIAs to scrutinize their users more closely. While we do not see this legislation as the likely cause for an increase or decrease in valuations themselves, buyers are likely to pay more attention to the RIA’s regulatory adherence, resulting in deals that take longer to complete.
Robo-advisors will continue to be competitive. Over the last several years, robo-advisors have posed a serious threat to RIAs by providing similar services for cheaper. RIAs have traditionally responded to the robo-advisor threat by providing higher-level services as well as those not offered by robot advisors. We see no reason to believe this trend will change, but robo-advisors will remain on the periphery, pushing RIAs to greater degrees of service.
Baby Boomers will cause a prolonged bubble in the retirement planning sector. As the Baby Boomer Generation enter their golden years, it's very likely that we will see increased valuations in the coming decade as more and more people seek retirement planning services. This bubble, of course, has a natural end, but will likely result in a spike in short-term deal volume.
The essential takeaway from these insights is that the 2024/2025 market will be a great time to sell an RIA, but sellers should be prepared for a lengthy deal process full of complex negotiations. This is likely to pick back up following the election in November as the regulatory future of the industry becomes more clear.
Achieving High RIA Valuation Mulitples
As complex as RIA valuations seem on paper, the reality is that they are significantly more complex in real life. The key to navigating the sale of your company for the highest RIA valuation multiples is having the right representation – all too often we see owners who decide to represent themselves and end up leaving millions of dollars on the table.
Our teams have worked with thousands of RIAs as they take their companies to market, managing complex deal scenarios and earning the highest possible payouts. Contact us for more information.
About Sica | Fletcher: Sica | Fletcher is a strategic and financial advisory firm focused exclusively on the insurance industry. Founders Michael Fletcher and Al Sica are two of the industry's leading dealmakers who have advised on over $16 billion in insurance agency and brokerage transactions since 2014. According to S&P Global, Sica | Fletcher ranked as the #1 advisor to the insurance industry for 2017-2023 YTD in terms of total deals advised on. Learn more at SicaFletcher.com.
Contact: Mike Fletcher
Managing Partner, Sica | Fletcher