Artificial intelligence has yet to move the needle on how much a wealth management firm is worth – but it is already reshaping which buyer a seller decides to join.
That's according to Rush Benton, managing partner at investment bank Gorman Jones, who shared his insider perspective with InvestmentNews in a recent interview.
"I haven't seen it," Benton said when asked whether AI adoption is producing a valuation premium for sellers – or a discount for the ones lagging behind – in the current wave of RIA consolidation. "In [buyers'] analysis of value of one of these small firms, nowhere have I seen a discount or a premium applied because of their AI usage or lack thereof."
Benton, who spent 12 years leading M&A at Captrust before founding Gorman Jones to represent sellers, said large acquirers today are more interested in target firms for their client relationships and advisor talent.
"They're really buying the client base and the advisor talent. They're not buying the technology stack that that small firm has," he said, noting how major consolidators are plugging acquisitions into their own built-out platforms.
Rather than buyers scrutinizing a seller's AI usage, Benton said independent owners are increasingly evaluating prospective acquirers on the strength of their technology.
"[If] I'm looking at 12 different large national firms ... one of the things I'm going to consider is how good are they at implementing AI and are they devoting the resources to it," he sad, describing the converging thought process among clients weighing a sale."
That shift is playing out against a backdrop of heavy AI spending across the wealth management and brokerage industry. In the ongoing war for talent and books of business, technology is emerging as a staple recruitment signal, from broker-dealers announcing billion-dollar-plus technology investments to dedicated AI leadership hires happening across the RIA and family office spaces.
As advisors become more comfortable using AI in their day-to-day, Benton maintained that large firms, which have the ability to deploy those systems at scale along with dedicated resources to support rollouts and continued usage, are likely to pull even further ahead of smaller challengers.
"AI executed at an enterprise level with a lot of resources behind it is going to be ... more impactful than what a small firm can do," he said.
As a veteran dealmaker, Benton described several waves of consolidation rolling over the industry. The earliest RIA sales, he argued, were motivated mainly by concerns around valuations and liquidity. That was followed by a "platform relief" phase, where sellers became more interested in partners who could help them handle compliance, technology and accounting. From there, sellers' focus shifted to include a desire for growth support, with platforms like Rise Growth Partners, Sanctuary Wealth, and Elevation Point emerging to help bridge the gap.
At the moment, he said more advisors have been coming to him with concerns around the potential AI disruption. Pushing back against the notion that personal relationships will always win out, Benton said one of his clients recently expressed concerns about his ability to retain new clients looking forward, in contrast to before when winning new clients was the question of the day.
"I think it is not far behind that [sellers will say] 'Okay, I want all of that,' and then ask 'Who's going to protect me in an AI environment where we just don't know what the future holds," he said.
For owners of firms carrying significant valuations in the current seller's market, Benton said the calculus increasingly favors selling sooner rather than later. Apart from the possibility of multiples starting to plateau or even come down from their heady record highs, he argued that aggregators are likely to keep winning as the AI story continues to play out across the wealth space.
"You've got to think long and hard about not taking 80% off the table," he said, suggesting sellers roll roughly 20% into the acquiring firm's equity, which he expects to outperform independent ownership through an AI-driven transition.
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