Why increasing AUM isn’t the only way to build a more valuable advisory business.
For many independent financial advisors, growth has traditionally been measured by one number: assets under management (AUM).
More assets mean more revenue. More revenue means a bigger business. And a bigger business should be worth more, right?
Not necessarily.
The RIA industry is evolving, and so is the way advisory businesses are valued. While AUM remains important, buyers are increasingly looking beyond assets to evaluate the strength, scalability, and long-term growth potential of a firm.
For independent advisors, this raises an important question:
Are you simply growing your practice, or are you building a more valuable business?
The Growing Gap in RIA Valuations
According to Piper Sandler data highlighted in OneSeven’s The 20x Multiple Reality whitepaper, historical median EBITDA valuation multiples vary significantly by firm size:
- RIAs with $10B+ in AUM: Approximately 21x EBITDA
- RIAs with $1B–$10B in AUM: Approximately 15.5x EBITDA
- RIAs with less than $1B in AUM: Approximately 8.1x EBITDA
These figures illustrate a significant valuation gap between smaller independent firms and larger institutional platforms.
But size alone doesn’t tell the whole story.
Larger organizations often benefit from established infrastructure, operational efficiencies, diversified growth strategies, and resources that smaller firms may struggle to develop independently.
The opportunity for advisors isn’t necessarily to become a $10 billion firm themselves. It’s to build a stronger business by accessing the resources and advantages of a larger RIA platform.
What Makes an Advisory Business More Valuable?
Today’s buyers are looking for businesses that can grow consistently, operate efficiently, and remain successful beyond their founders.
Several factors can influence an advisory firm’s long-term enterprise value.
- Consistent Organic Growth
A business with a repeatable strategy for attracting new clients may be more attractive than one relying primarily on referrals and personal relationships.
Investing in marketing, prospecting, and business development can help create a more predictable path to growth.
- Scalable Operations
As a practice grows, so do its operational responsibilities.
Technology, compliance, staffing, reporting, and client service all require time and resources.
Advisors with access to established systems and operational support may be better positioned to scale without taking on every additional responsibility themselves.
- Reduced Key-Person Risk
A business that depends entirely on one advisor for client relationships, operations, and growth can present challenges for long-term continuity.
Developing processes, building a strong team, and establishing business continuity plans can help create a more sustainable enterprise.
- Stronger Profitability
Increasing revenue is important, but so is managing the cost of growth.
Access to shared resources, established technology, and centralized support can help advisors operate more efficiently while focusing their time on revenue-generating activities and client relationships.
You Don’t Have to Sacrifice Independence to Gain Scale
For many advisors, independence is nonnegotiable.
They’ve spent years building their brand, establishing client relationships, and creating a business that reflects their values.
The good news? You don’t have to give that up to benefit from the scale of a larger RIA.
By partnering with OneSeven as their RIA, advisors can maintain their independence while gaining access to the infrastructure and resources of a much larger organization.
You can continue to:
- Keep your brand. Maintain the identity and reputation you’ve worked hard to build.
- Run your business. Make decisions about your practice, team, and long-term direction.
- Own your client relationships. Continue delivering the personalized experience your clients expect.
- Maintain your independence. Operate your business with the flexibility and autonomy you value.
- Access greater support. Leverage OneSeven’s technology, compliance, operations, marketing, and growth resources.
Rather than spending time and money building every operational capability yourself, you can focus on growing your business with the backing of an established RIA.
How OneSeven Helps Independent Advisors Build Enterprise Value
At OneSeven, we believe independence and scale should work together.
Our model allows advisors to maintain control of their businesses while accessing the resources of a larger RIA platform.
Through centralized operations, compliance support, technology, marketing capabilities, and strategic growth resources, OneSeven helps advisors strengthen the foundation of their practices.
The goal isn’t to change who you are or how you’ve built your business.
It’s to give you the resources to take it further.
With the right support, advisors can spend less time managing operational complexity and more time strengthening client relationships, pursuing new opportunities, and building long-term enterprise value.
