A free 1-to-100 score just moved the opening bid in RIA succession talks

The valuation consultant FP Transitions this week launched a free online service, the Estimated Value Index, that asks RIA owners about annual revenue, assets under management and ownership structure and returns a ranking from 1 to 100 [s1c1][s1c2]. The practical consequence is not a better price discovery mechanism; it is a change in who arrives at the succession meeting holding a number.

The score is ordinal, not a price. FP Transitions CEO Brad Bueermann said it would be oversimplistic to claim a high score guarantees a firm could fetch, say, 18 times EBITDA, and described the index as a "relative indicator" [s1c3][s1c4]. He then supplied the conversion himself: "on a scale of one to 100, if you're a 98, you're a lot closer to that 18 times [EBITDA] than you would be if you were a 72" [s1c5]. Since EBITDA multiples are the most commonly used starting point for RIA valuations [s1c6], an owner who scores 91 has everything needed to do the multiplication without permission. The only calibration on offer spans 26 points of the scale and attaches no dollar figure to either end [s1c9].

That is the anchoring problem in its usual shape. The number costs the seller nothing [s1c1], carries the imprimatur of a firm that says it has performed more than 19,000 valuations over 25 years [s1c10], and lands before the buyer has seen a single expense line. Deal flow in wealth management continues on a tear [s1c7], and the industry already trades stories of firms getting as much as 20 times EBITDA, which valuation specialists routinely describe as rare [s1c8]. A free score does not create seller optimism. It gives seller optimism a citation.

Buyers have material to work with. The inputs are self-reported by the owner [s1c2], the peer set behind the ranking is not visible to the counterparty, and Bueermann's own examples undercut the idea that headline size drives price: he cited firms with $200 million in AUM selling for $10 million and firms with $800 million in AUM selling for not a whole lot more [s1c12]. That is a fourfold difference in assets for roughly similar proceeds [s1c13]. He also said prices once moved in lock step with AUM but buyers now focus on profit potential [s1c11]. A score built partly on AUM is therefore an argument the buyer can attack on the seller's own evidence.

Note also what the free tier is for. FP Transitions says the index diagnoses what ails a firm and suggests fixes [s1c14], with attention to employee compensation, which Bueermann called the primary expense for any advisory firm and an area where firms can be benchmarked against industry pay [s1c15][s1c16], and to whether commission-based pay still in place is conducive to growth [s1c17]. Firms that subscribe to a paid tier get data tailored to individual employees in particular geographies [s1c18]. Buyers also prize organic growth, which recent market gains have made hard to separate from asset appreciation, and the index looks at breadth of service offerings and average client age as proxies [s1c19][s1c20]. A free score that reveals a gap and a paid product that closes it is a coherent funnel, not a public utility.

What to watch: whether acquirers start asking for the index score in diligence or explicitly refuse to discuss it; whether FP Transitions publishes the distribution of scores and any observed relationship to realized multiples; and whether sellers who score well arrive with fewer, not more, verified financials.