So many wealth advisory owners are struggling with the tension between balancing the success they’ve built with the future they want. On the one hand, they’ve built a thriving company with loyal clients, a high-performing team, and financial freedom. On the other hand, there’s real fatigue from running a business, such as handling operational challenges or solving staff problems.
Meanwhile, private equity (PE) firms, aggregators, and capital providers are lining up at their door with big offers and even bigger promises. With 178 active PE investments in wealth management, up from 66 in 20201, there are billions of dollars in PE capital being poured into this industry.
These business owners are being courted regularly both because they’ve built something valuable and because the wealth advisory industry is also facing a personnel shortage. Nearly 40% of advisors are expected to retire within the next decade – representing 42% of total industry assets that will need to be transitioned.2 Between strong interest by investors and the limited number of next generation advisory leaders, owners are wrestling with whether to sell, stay, or structure something more nuanced.
Three challenges every firm owner must navigate
Advisory firm leaders across the country typically face three core dilemmas:
- First, there’s the battle between liquidity and legacy. These leaders have earned the right to monetize their business, but they also care deeply about who carries it forward. Successful advisors want to know that their clients will be cared for, their employees will be treated well, and the firm’s culture won’t be watered down in the name of scale.
- Second, there’s the conflict between control and capacity. Most founders didn’t set out to be COOs, yet the larger the firm grows, the more time is spent managing staff, vendors, compliance, and growth initiatives instead of serving clients.
- And third, there’s the friction between next-gen readiness and reality. Internal succession sounds great on paper. But when the next generation lacks the experience, the capital, or the desire to lead, it leaves many questioning if passing the baton is even feasible.
How successful firms make the right decision
The most intentional firm leaders are not waiting until burnout hits, or a surprise offer arrives. They’re taking control by getting clarity personally, professionally, and financially. Here are some ways to uncover the right choice to meet a company’s goals and priorities:
- Understand valuation: Work with an independent advisor, not a buyer, to get clarity on what the business is actually worth and what drives value. The actual market value of the firm can be one of the biggest factors in this decision.
- Evaluate next-gen leadership: Look for staff with core characteristics of effective leaders, such as the ability to adapt to change, cultivate a strong culture, communicate clearly, and manage struggling employees.
- Identify both internal and external options: Don’t just react to a surprise high offer, look at the full spectrum of options, including perpetuating internally, selling to a like-minded third party, taking on a minority investment partner, or focusing on growing the business for a few more years.
- Align strategies: Leadership strategy should align with enterprise value strategy, which focuses on maximizing a company’s overall value, not just driving cash flow or ownership convenience.
Beyond black and white insights
This isn’t just about maximizing the firm’s value; it’s also about preserving the business while positioning it for the future. The choices made in the next few years around talent, service offering, or organic/inorganic growth will shape the future of the business and its legacy.
The firms that are winning right now aren’t rushing into deals. They’re reflecting, getting expert insight, and choosing partners, not just offers. Wealth advisory firms who do this correctly are creating outcomes that serve not just their own financial goals, but the legacy they want to leave behind. As offers come in, owners should consider what the next chapter might look like for them, leadership, the team, and their clients. Those choices will shape the future of the business and the founder’s legacy.
The best deals aren’t necessarily the ones that pay the most – they’re the ones that align with a company’s vision, values, and goals. Business owners have invested years of time, energy, and resources into building a firm. The decision to sell, and who to sell to, should align with the reason the business was started all those years ago.
