“What’s Your Stock Worth?” Why Billion-Dollar RIAs Should Track Their Share Price Like a Public Company

By all traditional measures, you are already winning. Year-over-year revenues and profitability continue to grow steadily. AUM and AUA are both on an upward trajectory. You have expanded your bench strength, enhanced your value proposition for clients, and appropriately scaled your team’s size. All these factors indicate a thriving business.

However, as you aim to establish a valuable and enduring firm – one that you expect to partially or fully sell to next-generation partners or external investors at some point in the future – you’ll need to ask a more powerful question:

What’s your stock price?

Yes, I understand your firm likely doesn’t trade daily on the open market. It’s probably not listed on the NYSE or monitored by a Bloomberg terminal. However, this doesn’t imply that tracking your stock price is unnecessary. In fact, it’s a vital metric – just not one you’ve likely been focusing on much lately.

Imagine having a private ticker symbol scrolling across the top of your office monitors. How would the implied share price of your firm compare to that of Apple, Meta, General Mills, Coca-Cola, or McDonald’s? Or, for that matter, how would it fare against the broader S&P 500®?

You track public companies every day and analyze their investment cases. However, if you’re like most advisors, when it comes to your business, you likely stop short at basic financial metrics, failing to view it through the same lens you use to evaluate other outstanding companies worldwide.

I would propose that it’s time to shift this mindset.

Beyond the Core Metrics: Start Thinking in Multiples

Traditional metrics remain essential. Assets under management, revenue, profit margins, employee count, and client retention are all vital indicators of operational health. They are crucial for establishing internal goals and monitoring ongoing performance.

However, these figures, when viewed in isolation, do not always represent the true value of your business from an investor’s perspective. Instead, consider how a shareholder might evaluate your enterprise:

• What’s the multiple on your earnings? RIA firms are typically valued using a multiple of EBITDA (typically between 7x and 9x or more). However, this can vary significantly based on factors such as historical growth rate, client retention, demographics, revenue, and profitability. Valuation experts increasingly focus on discounted cash flow (DCF) analysis to provide more accurate assessments.
• What is your free cash flow? Free Cash Flow (FCF) equals Operating Cash Flow minus Capital Expenditures. In simple terms, it is what the business has left after covering expenses; cash that can be used for dividends, debt repayment, reinvestment, or other purposes. It is a key measure of your firm’s ability to generate cash and maintain operations without heavily relying on external financing. Free cash flow can be enhanced by increasing AUM and operational streamlining, diversifying revenue streams, and optimizing expenses.
• Is your revenue recurring, predictable, and scalable? While one-time project fees or plan creation fees often reduce valuations due to their unpredictability, most advisory firms generate highly predictable and stable revenue through ongoing AUM-based management fees and high retention rates. However, scalability can pose a challenge. Focusing on proactive hiring to establish excess capacity and building advisory teams to leverage individual strengths (e.g., rainmakers, lead advisors, service advisors, etc.) will enhance value.
• How effective is your reinvestment strategy? Reinvesting in your business by expanding capacity and capability, adopting more efficient technology tools, and enhancing your marketing, sales, and ongoing communication efforts is essential. This approach enables you to extend service offerings that deepen your firm’s impact and improve relationship ‘stickiness’ with existing clients, broaden your appeal to prospects, and better capture emerging opportunities. While these efforts may initially compress profit margins, the resulting higher fees, newly acquired clients, and additional revenue streams should more than offset the expenses.

If you’re contemplating future equity transitions – whether to next-generation leaders or a minority investor – you need to convey the investment thesis for owning shares in your firm. This necessitates thinking like a publicly traded company.

What Investors Buy

Warren Buffett doesn’t just look at the financials when he evaluates a company. He famously said: “It’s far better to buy a wonderful company at a fair price than a fair company at a wonderful price.”

In other words, fundamentals matter, but so does your story. People buy into a company because they believe in the leadership team, the culture, the potential for future growth, and the sustainability of its competitive advantage. Therefore, your stock price is a proxy for how clearly and convincingly you’ve communicated that story to your internal and external stakeholders.

As Burton Malkiel wrote in A Random Walk Down Wall Street: “The value of any investment is, and always must be, a function of the present value of future cash flows.”

The Power of Having a Price

When you start tracking your firm’s implied stock price, several shifts occur:

1. Your internal dialogue elevates. You begin discussing your business in terms of shareholder value creation.
2. Your next-generation team becomes more engaged. They start thinking like investors and owners – not just employees.
3. Your strategic priorities sharpen. Decisions begin to be measured by their long-term effect on value.
4. You become more attractive in the marketplace. Value-minded firms garner the lion’s share of investor attention, whether for succession, M&A, or capital.

One Slide. Once a Year. That’s All It Takes.

To embed this mindset into your business, we recommend creating and updating a single presentation slide each year that includes the following information:

• Firm Stock Price (Total enterprise value ÷ outstanding shares)
• Assets Under Management / Advisement
• Total Revenue
• EBITDA / Profit
• Profitability as a % of Revenue
• Number of Team Members

Include the prior year’s data alongside your current year’s metrics to track and demonstrate changes in growth and value more clearly. This one slide will capture the essence of your firm’s financial DNA and valuation journey. Share it with your leadership team. Discuss it with your board or key stakeholders. And use it to illustrate why your firm is worth owning – both now and in the future.

Final Thought

Your firm may never go public—and that’s okay. If your long-term vision is to build something enduring, it's time to sharpen your focus on leading the firm, enhancing shareholder value, and creating a business that attracts future shareholders.

Coaching Questions from this Article

1. If your company had a publicly available stock price every day, what steps would you take in the next 12 months to increase its value?
2. How clearly can you articulate the investment thesis for owning a share of your firm, and how might that thesis evolve over the next three to five years?
3. If your next-generation leaders thought and acted even more like shareholders, what cultural and operational shifts would be needed to support that mindset?
4. Which team member is responsible for updating your “Financial DNA” slide every year?

About ClientWise LLC

ClientWise is the premier business and executive coaching firm working exclusively with financial professionals. We specialize in helping clients optimize growth and maximize revenue by engaging as a knowledgeable partner in accomplishing specific and significant business results. Our full-service coaching program empowers financial advisors, wholesalers, managers and executives to enhance performance through customized, action-oriented solutions based on each client’s specific vision and situation.

Our certified coaches are members of the International Coach Federation (ICF). They adhere to ICF’s strict code of ethics and have the experience and insight to work with you on the unique challenges and opportunities you face each day.

Drawing from an in-depth knowledge of the financial industry, ClientWise’s mission is to professionally develop industry leaders and consistently raise the bar for industry service, commitment and integrity. Simply put, our singular focus is to help you get clear, get focused, and get results.