RIA M&A and Growth Rooted in Digital Transformation: Ramos

Adviser Investments’ Mario Ramos says the economic realities widening the gap between well-run RIAs and those with less sustainable models


Consolidation in the RIA market continues to prove an intriguing hot topic, no matter the prevailing wisdom regarding potentially negative effects of economic policy and market volatility over the coming months. As the RIA model grows in complexity and popularity – and its M&A market more competitive – larger firms looking to attract sellers must offer a compelling rationale to close the deal.

Even as experts note that deal size is shrinking and volume is decreasing, the opportunity for RIA aggregators to aggregate and large firms to acquire smaller counterparts remains healthy. Standing out in a crowded marketplace will be the key to success going forward. However, that can prove difficult when the competition is tight.

Digital Wealth News spent some time with Mario Ramos, CEO at Adviser Investments, to get his thoughts on near-term M&A trends, as well as insights into his firm’s strategy for positioning itself as the destination of choice for small- to mid-sized RIA firms looking for a buyer.

DWN: Do broader economic uncertainties and market volatility create more incentives or disincentives for small and mid-sized RIA firms to sell to bigger firms, and why?

Mario Ramos: M&A activity remains strong, yet we’re seeing valuation expectations finally return to earth. Even so, rising interest rates are widening the gap between well-run, growing firms and those with less sustainable operating models. As a result, buyers with scalability and attractive value propositions continue to differentiate themselves.

As for sellers, business succession, tech demands and regulatory pressure continue to be triggers for pursuing a transaction. As these demands continue to rise, firms that are unable to scale need access to the resources of larger firms. While there are many reasons to consider selling, the market has become more selective on both sides of the negotiating table.

DWN: How does Adviser Investments articulate its value proposition for small and mid-sized RIA firms seeking to sell their businesses to a larger firm?

Ramos: We’re growing thoughtfully from a position of strength with a strategy that’s rooted in digital transformation. By integrating diverse platforms and streamlining the client onboarding process, we are able to offer custom wealth management solutions and an elevated client experience.

The backing of Summit Partners gives us the wherewithal to continually invest in the tools and resources that meet our industry’s stringent regulatory requirements—and our advisers’ high standards. The result is a firm large enough to offer a comprehensive array of financial services but small enough to maintain a boutique approach to personalized client care.

Today, with so many tech solutions supporting our industry, firms like ours can develop a bespoke platform that drives significant growth. Our leadership and employees are the architects of this effort—shaping an Adviser Investments approach that resonates with financial professionals and separates us from the sea of competitors.

DWN: What is your sweet spot in terms of potential acquisitions, and how do you leverage technology to support seamless integration of the wealth management businesses you acquire?

Ramos: A big part of it is culture. Do our values and goals align? Is it a good strategic fit for both parties? And, importantly, will clients realize a tangible benefit? If we are mostly aligned in those areas, we look closely at firms that can enhance our capabilities, fill out our geo footprint and are willing to embrace holistic wealth management.

We are constantly investing in our ability to support our advisers and make the onboarding process as smooth as possible. Right now, we’re developing a multi-year investment plan for technology—including a new tech stack to enhance the adviser and client experience, drive efficiencies and allow us to remain nimble enough to address emerging trends and regulatory shifts.

DWN: Any predictions on what the wealth management industry should expect with the RIA M&A landscape for 2023 and beyond?

Ramos: On the heels of an active 2022, I think some buyers may take a step back, digest some transactions and potentially adjust to new economic and market realities. Transactions will continue to occur, but probably not at the pace to which we’ve become accustomed.

While I think we can expect some slowdown in activity and more reasonable valuation multiples, there is still a significant amount of interest and acquisitive capital in our industry. This means that while deals may be smaller on average in the foreseeable future, activity, and perhaps valuation, is likely to ramp-up again once volatility and markets settle down. At Adviser Investments, we’re continuing to evolve, invest in our firm, and support our advisers’ ability to stand out in a highly competitive market.