The wealth management industry is experiencing a fascinating shift in registered investment advisor (RIA) valuations, according to a recent survey by DeVoe & Company. After years of record-high valuations, the market is now entering a new phase, with buyers becoming more measured in their expectations. This shift is particularly interesting as it marks a notable change from 2025, when some consolidators were still anticipating higher valuations. But what makes this story even more intriguing is the underlying dynamics at play.
One key insight is the wide range of valuation outcomes within the current buyer pool. While internal succession transactions anchor the lower end, strategic RIA acquirers and PE-backed consolidators typically pay the highest valuations. This is where the real drama unfolds. DeVoe highlights that the transactions commanding high multiples, often north of 20x, involve firms with exceptional growth, profitability, and strategic attributes that most sellers lack. This dynamic suggests a power imbalance, where buyers with deep pockets and strategic advantages are driving the market, leaving sellers with fewer options.
Brett Zaniewski, from Decerno Advisors, agrees that valuations may have peaked, but emphasizes that they are not down. This nuanced perspective is crucial, as it highlights the ongoing competition in the market. Buyers are indeed being flexible, offering a mix of cash and equity, and even granting equity to second-generation family members. This flexibility is a strategic move to make deals more favorable for sellers, indicating a willingness to adapt and find common ground.
The survey also reveals an interesting expectation gap between buyers and sellers. Nearly three-quarters of consolidators report that the gap between what sellers expect and what buyers are willing to pay is widening. This disconnect is partly due to years of record transaction volume and headline-grabbing valuations, which have shaped seller expectations, especially the premium multiples private equity pays for RIAs. This gap is a significant challenge, as it can lead to prolonged negotiations and potential deal breakdowns.
Despite the slowdown in the second quarter, the underlying drivers of RIA M&A activity remain strong, according to DeVoe. Buyers still have capital to deploy, and sellers continue to face growth and succession challenges. This resilience in the market suggests that the current conditions are not a temporary blip but a reflection of deeper industry trends. Jim Gold, CEO of Steward Partners, supports this view, suggesting that deal activity is often underreported, and the market is more active than it seems.
Looking ahead, M&A consultants at Marshberry predict a robust 2026 for dealmaking in the wealth management sector. With a forecast of over 400 deals, the industry is expected to reach its highest level since 2020. This positive outlook further emphasizes the ongoing demand for RIAs and the potential for further consolidation. However, the key question remains: how will this market evolution impact the valuation expectations of both buyers and sellers?
In conclusion, the RIA valuation landscape is undergoing a significant transformation, with buyers becoming more measured and strategic. The power dynamics between buyers and sellers are shifting, and the expectation gap is a critical challenge. As the market continues to evolve, the question of how valuations will ultimately stabilize remains a fascinating one, with potential implications for the entire wealth management industry.
