RIA Leaders Must Get Their House in Order
This article by David Selig, CEO of Advice Dynamics Partners, was originally published on Citywire RIA in January 2026, with the title: “RIA leaders must get their house in order in 2026.”
As a new year kicks off, one theme is clear: The gap between RIAs built for scale and others still operating like lifestyle practices is widening.
Your private equity-backed RIA competitors are operating like professional athletes, training with state-of-the-art facilities, utilizing advanced data analytics and leveraging well-funded systems. Private wealth businesses that stay on the sidelines or stick to the status quo often find it harder to adapt as the market evolves further away from what they are used to. The traditional ‘wait and see’ strategy may no longer be a viable way forward.
As 2026 unfolds, are you preparing your firm to compete, transition and grow in this new reality, or are you hoping past success will continue to carry you?
A Changing Competitive Landscape
Private equity-backed wealth management firms are reshaping expectations across the space, and not just expectations by clients and staff, but expectations as to what it means to be a stable and sustainable RIA. These ‘elite athlete-like’ firms offer broader client service menus, leverage purpose-built centralized support capabilities and are investing heavily in artificial intelligence (AI) and automation. They’re competing more aggressively for both clients and talent, and they are winning. Non-PE-backed, subscale firms don't need to mirror this structure, but they do need to recognize how it shapes the market around them.
Many of your scaled competitors are achieving above-market organic growth levels, with annual net flows typically in the 8-10% range or higher, and some are experiencing annual equity appreciation rates in the 30% to 40% range due to their operational discipline and M&A prowess. For the most part, these firms aren't ‘growing for growth’s sake.’ They're demonstrating that well-documented processes, strong margins and clear growth strategies can produce beneficial results – results which clients appreciate and are financially rewarding for employee shareholders.
The takeaway for RIA owners isn't that you, too, must become a PE-backed operator. It's that the competitive bar has risen. A thoughtful, measured plan for improvement is now part of good company stewardship.
Valuation Realities, Not Myths
Another area where firms benefit from clear-eyed planning is valuation. There's a common belief that all RIA valuations are high in today’s market. In truth, they vary widely based on structure, growth and operational maturity.
A solo or siloed practice may only command five to nine times its earnings before interest, taxes, depreciation and amortization (EBIDTA). Ensemble firms typically fall into a nine to fifteen times EBITDA range. Only firms exhibiting true enterprise characteristics reach the higher end of the market, trading well above fifteen times.
These differences aren't arbitrary. They reflect what buyers, both external and internal successors, look for: Depth across multiple advisors and client relationships rather than key-person dependence, documented processes, consistent positive flows, strong margins, success at recruiting and a track record of sustainable growth.
This matters just as much for owners thinking about internal succession as for those considering an external transaction. The next generation of company leaders (G2) understand valuation mechanics. They pay attention to what well-run firms look like, and they'll want to buy into a business that has a plan and a structure they can build upon.
The PE Scorecard
One theme that appears in every valuation discussion today is ‘documentation.’ Firms often proudly describe themselves as client-centric, differentiated, disciplined or highly stable. Yet without measurable evidence, those qualities aren't visible to investors or successors.
This is where what we call ‘the PE Scorecard’ is most useful. It evaluates firms across three main areas: stability, sustainability and growth.
By measuring multiple criteria under each of these subjects, RIAs can highlight where their capabilities are strong and where they need attention. We like to say, ‘if it's not measured and documented, it doesn't count.’ Not as a rebuke, but as a reminder that good businesses rely on objective inputs and on-demand reporting.
-
Margin consistency, fee rate discipline and recurring revenue strength.
-
Leadership depth, G2 readiness and client relationship coverage that extends beyond any one advisor. goes here
-
Organic lead flow, win/loss tracking and a firm's ability to grow bottom-line profitability in a repeatable way.
Most firms score well in some areas and need improvement in others. That's normal. The PE Scorecard (and this is just a snapshot) simply gives RIA owners a clear, navigable map for targeted action.
A Practical Path Forward
The point of all this is not to sound alarms or predict dramatic shakeouts. It's to give RIA leaders a framework for thoughtful planning at a time when market dynamics are quickly evolving.
As an RIA owner turning the chapter on 2025 and moving into 2026, you can benefit from focusing on three strategic priorities:
Clarify your position: Understand where your firm sits today across operational maturity, succession readiness and valuation drivers.
Document every aspect of your business: Turn instincts and institutional memory into processes, metrics and systems that others can evaluate and build upon.
Invest in the areas that move the needle: That might mean improving fee discipline, managing overhead more deliberately, formalizing G2 development, tracking asset flows more consistently, or reinventing your growth engine.
These steps don't require a dramatic overhaul. They require intention. Private wealth firms making steady, incremental progress each year are the ones securing stronger valuations, attracting better talent and creating options for ownership succession.
In 2026, the question isn't whether you need to become a scaled enterprise. It's whether your firm can show the clarity, consistency and discipline that define well-run businesses in any market environment. The firms that do will be the ones with the most strategic flexibility and the strongest valuations, however they choose to use them.
This article was written by David Selig, founder and CEO of Advice Dynamics Partners. David has over twenty years of experience in M&A, management consulting and financial services. He serves as a champion and advocate for Advice Dynamics’ clients, as he shepherds them through their complex transactions.