Tr?id=566623520170033&ev=PageView&noscript=1

Fidelity Study Finds Rise in RIA Valuations Reaches Plateau

Posted on June 28th, 2023 at 3:43 PM
Fidelity Study Finds Rise in RIA Valuations Reaches Plateau

From the desk of Jim Eccleston at Eccleston Law 

According to a recent study conducted by Fidelity Investments, the financial industry expects a continued rise in registered investment advisor (RIA) dealmaking over the next five years, despite the increasing cost of acquiring RIA firms.

Owners of RIAs are now demanding higher prices for their firms compared to the period between 2017 and 2019, according to InvestmentNews. Fidelity's study found that the commonly used valuation metric, EBITDA (earnings before interest, tax, depreciation, and amortization), has increased multiples for RIA transactions. Previously, RIA firms were typically valued at around eight times EBITDA, but in the current market, higher multiples are being observed.

Fidelity attributes this rise in the EBITDA multiple to factors such as strong organic growth, young and ambitious next-generation leaders, and a significant presence in key geographic areas. While the price has increased by 200 percent, multiples for high-quality firms are stabilizing.

RIA firms that lack a leadership succession plan or strong management team or rely heavily on a single large client are likely to receive lower offers during the sale process, according to Laura Delaney, Fidelity's vice president of practice management and consulting. Currently, the most valuable type of RIA firm possesses a strong management team, a culture of business development, and a focus on incorporating the next generation of investors into their client base.

 

Eccleston Law LLC represents investors, investment advisers, and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.

 

Tags: eccleston, eccleston law

Return to Archive

TESTIMONIALS

Previous
Next
Quotes Bigger

Fantastic news!!!!  Your professionalism, support and expertise were greatly appreciated.  You made a difficult situation much more bearable.

Marci M.

LATEST NEWS AND ARTICLES

1779287606 Law
May 20, 2026
FINRA Sanctions Ameriprise for Supervisory Failures in Variable Annuity Exchanges

The Financial Industry Regulatory Authority (FINRA) has fined Ameriprise Financial Services and ordered restitution to resolve allegations that the firm failed to adequately supervise certain variable annuity exchange recommendations.

1779216500 Law
May 19, 2026
SEC Fines Ally Invest Advisors Over Undisclosed Robo-Advisor Conflict

The Securities and Exchange Commission (SEC) imposed a $500,000 penalty on Ally Invest Advisors after finding that the firm failed to disclose a material conflict of interest tied to its Cash-Enhanced robo-advisor accounts.

1779206639 Law
May 19, 2026
Federal Court Upholds FINRA's Authority in Alpine Securities Challenge

A federal court has rejected a broad constitutional challenge to the authority of the Financial Industry Regulatory Authority (FINRA), delivering a significant victory for the self-regulator and reinforcing its enforcement framework.