Echelon Rolls Out RIA Valuation Business

“We get called to do valuations for … a merger, acquisition or when a partner is leaving or getting a divorce. This work led us to develop our 11-valuation service bundles…,” he added. “Since we started doing this work, we reinvented our whole valuation process and developed new parts of the process.”

DOL Dynamics

The Department of Labor’s new fiduciary rule, which went into effect Friday, will affect firms in two ways, the CEO says.

For some financial products, the regulations put “downward pressure on revenue, since there are some products that can no longer be sold or some that have to be moved into another sales category,” for instance, he explains.

Plus, the rule puts “increased pressure on expenses”; especially in the first year, firms have to spend more time on products “to do things the correct way,” which is likely to raise costs, according to Seivert.

“We are talking about changes that can drive down valuations overall and makes the question of valuations more challenging for the industry,” the executive said. “In some cases, DOL will lead to negative growth for advisors, which creates another valuation for them.”