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Practice Management > Building Your Business

Echelon Rolls Out RIA Valuation Business

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Echelon Partners has launched a sister company, RIA Valuations, to provide comprehensive valuation services to the independent RIA industry.

Echelon CEO Dan Sievert will discuss the new business this Wednesday at the Pershing Insite conference in San Diego.

“Valuation always has been part of our three-prong business model, along with consulting and investment banking for wealth and investment management companies,” said Seivert in an interview. 

“We’ve been incubating RIA valuations for the last six months,” he explained.

Starting the second business was “a strategic decision we made based on the notion that we are going to be better at all the valuation models we do by giving [this focus] its owns business with its own life, brand and specialization,” the CEO says.

Over the past 15-plus years it has been in business, Echelon has done more than 1,000 valuations for many different types of wealth management firms and investment managers, according to Seivert.

“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.”


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