Could a wave of advisor retirements depress RIA valuations?

With RIA sale prices showing no signs of slowing their rise, a pair of valuation experts nonetheless see a looming correction on the horizon.

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Ryan Kaminski and Chris Gent, the founders of M&A advisory firm Green Sail Capital Partners, take the contrarian view that the steady increase in average selling prices will reverse within the next five years. The duo, who work primarily with financial advisors looking to sell their businesses, base that prediction in large part on an upcoming wave of RIA owners expected to retire in the next few years.

That long-expected wave of advisor exits will flood the market with supply, ultimately depressing sales prices, they argue. 

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Like many industry observers, Kaminski has seen RIA deal valuations climb steadily higher in recent years. How he and Gent differ from some of their counterparts is that they don’t see them ticking up indefinitely.

“We personally think that this is like a bubble,” Kaminski said. “That’s our opinion, which might be a bit different. Most people think this is just going to go on forever, that there will always be high valuations and plenty of deals.”

This isn’t the first time industry dealmakers have predicted a bubble in RIA valuations. Yet, despite such prognostications, sale prices have continued their upward march — perhaps making M&A specialists hesitant to talk about bubbles again. 

In its latest RIA Deal Room report, acquisition and valuation consulting firm Advisor Growth Strategies found that the median price offered for RIAs rose from 11 times EBITDA (earnings before interest, taxes, depreciation and amortization) in 2024 to 11.6 times EBITDA last year. Though last year’s median EBITDA multiple was up only 5% from 2024, it was up 40% from 2020. That suggests increases in valuations may have slowed but certainly not stopped.

But the report offered no evidence of a coming collapse. 

“There is no reason to expect deals to slow down as we make progress into 2026,” according to the report. “Demand is at an all-time high, sellers are considering transactions at a much higher rate, and the markets are doing well.”

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But Kaminski said RIA purchases can run strong while valuations decline. Even the most acquisitive buyers are unlikely to have enough pent-up demand to absorb the wave of firms likely to come onto the market because of advisor retirements in the next five years.

In a report last week, the research firm Cerulli Associates predicted 26,000 advisors will retire from RIAs and independent broker-dealers in the coming decade. 

“Advisor retirements remain the largest addressable market for RIA acquisitions in terms of AUM,” according to Cerulli. “On average, these retiring advisors have larger books of business than employee advisors looking to break away.”

Kaminski said there will be no shortage of firms to acquire.

“Presumably, if all these aging advisors finally decide to cash in at some point, the supply will just be so great that all these consolidators and aggregators will realize, ‘We don’t necessarily need to compete with each other and bid these crazy multiples to win deals,'” Kaminski said.

Gent said most valuation offers are at least partly influenced by what other firms are willing to pay and sellers are seeking — which has been steadily ever more in recent years.

“But if one day they’re expecting a 22 or 23 times multiple and they hit an 18 or 19, the next person is going to see that and react accordingly,” he said, “because everyone’s just copying everyone else.”

Kaminski said he doesn’t necessarily foresee the valuation bubble popping in a way that would cause deal sizes to crash.

“But maybe seven to eight times [EBITDA] is what a good business gets in a lot of comparable industries for smaller companies,” he said. “So we think eventually it probably contracts that way.”

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Reasons for skepticism about a valuation correction

Of course, a contrarian opinion wouldn’t be worthy of its name if there weren’t someone willing to dispute it. Corey Kupfer, a lawyer specializing in M&A work for registered investment advisors, said he can see valuations growing more slowly, holding steady or even declining slightly in coming years. But he thinks a big correction is highly unlikely.

Kupfer said the impending wave of retirements has been talked about for the past 15 years, at least, but it has yet to materialize.

“I don’t want to say it’s not going to happen,” Kupfer said. “But you also have an industry here where people can work well into their later life.”

He also noted that just as the supply of RIAs for sale seems almost endless, so does the pool of buyers. In the last couple of months, Kupfer has given a handful of presentations offering advice to firms seeking to become RIA acquirers. The would-be buyers included an existing RIA, a family office, a multifamily office, a U.K. wealth manager looking to enter the U.S. market and a hedge fund.

Meanwhile, private-equity firms continue to provide capital to the large RIA acquirers that have been behind the bulk of mergers and acquisitions in recent years.

“An overabundance of deals is less likely to happen as long as new buyers and new PE money keep coming into the space,” Kupfer said. “I’m not saying it won’t happen eventually. But I think with the rate of new buyers and new PE coming into the space, we’re not super close yet.”

Kupfer said he thinks much of the increase in valuations has been driven by the nature of private equity. When private owners take a stake in a firm that uses the resulting capital infusion to go out and acquire RIAs, they do it with the expectation that they’ll be able to sell their investment at a profit in several years.

“The game doesn’t work unless valuations go up,” Kupfer said. “The next bigger player — whether it’s PE, a sovereign wealth fund, a family office or insurance firm — wouldn’t get in, and the others wouldn’t get out, right, unless the valuations are going up.”

Kupfer said a day will come when some private equity owners find they can’t get the valuations they had expected. They’ll then most likely have to sell the firms they’ve taken stakes in for less than they were hoping for to other big acquirers. In other words, the winners will end up subsuming the losers.

“But we’re not late in the PE cycle,” Kupfer said. “We’re not at the beginning of it anymore, certainly, but we’re not anywhere near the end, where other industries have run into trouble.”

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The median deal multiple may continue to rise. But that doesn’t mean every firm that’s for sale will command a high price.

In the past, many of the firms that landed a high sale price were simply the ones that had the most assets under management. A report on asset and wealth management released Thursday by the consulting and accounting firm PwC suggests that may no longer be the case.

Buyers are increasingly looking for firms that have something to offer beyond basic wealth management services. Roland Kastoun, leader for asset and wealth management deals at PwC, said a big differentiator is a demonstrated ability to achieve “organic” growth — often defined as bringing in assets from new or existing clients. 

With bull markets driving up AUM tallies in recent years, buyers are increasingly trying to distinguish long-term sources of growth from gains due to strong investment returns. RIAs for sale can prop up their valuations by taking steps like giving clients access to private equity, credit and other alternative investments — a way of bringing in new assets that relatively few firms have.

“I think there’s typically a difference in valuation when it’s a strategic acquirer,” Kastoun said. “Think of an existing wealth manager that wants to acquire a capability versus a roll-up approach, where I’m a PE-backed acquirer, and I’m trying to acquire 20 firms and then I’m just going to put them together.”

Kaminski said he thinks industry consolidation could also depress prices. Cerulli’s research shows firms with large AUM totals are becoming increasingly dominant.

RIAs with $5 billion or more in client assets held 54% of the industry’s total AUM in 2024, up from 34% in 2018. At some point, Kaminski said, the big aggregators will start buying each other up. When they do, there will be fewer firms competing to pay high prices for the best acquisition prospects.

“As opposed to maybe having 100 big buying RIAs, if it comes down to 20, or even fewer, there’s still so many deals out there,” Kaminski said. “You would have to think that they would realize, ‘Hey, we don’t necessarily need to pay these crazy multiples anymore.'”

All that suggests now is a good time for RIA owners who plan to soon exit the industry to consider selling.

“Most buyers would say, ‘Sell five years before you’re ready to leave,'” Kaminski said. “The reason being is that they want that continuity. They don’t want to have to find that there’s a shortage of junior advisors. They don’t want to have to figure out who’s going to take over the client relationship.”