Welcome everyone! Welcome to the 506th episode of the Financial Advisor Success Podcast!

My guest on today's podcast is Jenna Biancavilla. Jenna is the founder of Pearl Capital Management, an RIA based in Phoenix, Arizona, that oversees approximately $275 million in assets under management for 110 client households.

What's unique about Jenna, though, is how she leverages a ‘scorecard’ that tracks key weekly and quarterly metrics that help keep her on track to achieve company goals, which range from new client growth to days taken off by team members.

In this episode, we talk in-depth about how Jenna’s scorecard starts with metrics that measure engagement with clients (for example, how many client touchpoints an advisor had) and work done to attract new clients (such as meetings with key centers of influence), how Jenna also includes metrics targeted at employee retention (including tracking the number of days team members took off where they weren’t contacted by someone at the firm), and how Jenna tracks other metrics quarterly, including the close ratio on prospects, total AUM, AUM per household, and revenue per household.

We also talk about how implementing practices of the Entrepreneurial Operating System relatively early on has helped Jenna and her team better address business issues that pop up during the week (and run more efficient meetings in the process), how Jenna and her team set and prioritize quarterly "rocks", which typically represent projects that will help the firm grow into the future but might otherwise have been ignored amidst day-to-day responsibilities at the firm, and how Jenna incorporates team member input and the firm’s meeting calendar when setting scorecard targets and rocks to ensure that they are actually achievable.

And be certain to listen to the end, where Jenna shares why she is willing to share planning insights during prospect meetings (rather than waiting for them to become a client), how Jenna’s fee structure has changed over time (including how she found offering a flat-fee model didn’t work well for her firm), and how Jenna has saved time and reduced her stress during her career by recognizing that not every prospective client she meets is the ‘right’ client for her.

So, whether you’re interested in learning about effectively identifying and tracking key firm metrics, using a structured system to organize major firm projects, or how to incorporate team members into the goal-setting process, then we hope you enjoy this episode of the Financial Advisor Success podcast, with Jenna Biancavilla.

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Welcome to the September 2026 issue of the Latest News in Financial #AdvisorTech – where we look at the big news, announcements, and underlying trends and developments that are emerging in the world of technology solutions for financial advisors!

This month's edition kicks off with the news that Altruist has been acquired by Vanguard, representing a major shift for an RIA custodian that had previously been untethered to a retail financial institution – but the bigger industry implication is that by owning its own custodian, Vanguard can undercut and effectively push back on the insistence of other custodians to charge revenue sharing payments on ETF assets, which could have a profound impact on those custodians' revenue models and potentially trigger another round of consolidation in the custody business.

From there, the latest highlights also feature a number of other interesting advisor technology announcements, including:

• The AI prospecting solution FINNY has revamped its pricing model, switching from a flat-fee annual subscription to primarily a 20bps revenue share for new client revenue brought in through the platform – which shows how FINNY sees itself as more of an automated business development 'employee' than a SaaS platform, but the question remains how much of the prospect sourcing and cultivation process FINNY can truly automate (since advisors have proven willing to pay a revenue-share percentage to people or platforms that can reliably get prospects on their calendar, but may not be willing to do so if they're still responsible for doing most of the work of sourcing and developing those prospects)?
• Startup CRM providers Slant and FinTurk both launched new forms-related tools – Slant's for building forms, and FinTurk's for filling forms out – that eliminate the need for their users to buy standalone tools for those purposes, and reaffirm how CRMs can still be useful in the era of AI by building new functions that help advisors better leverage the data they have
• Pontera, the platform aiming to enable advisors to directly manage their clients' assets within 401(k) plans, has announced a new non-discretionary 401(k) advice tool for advisors who can't or prefer not to manage their clients' 401(k) assets directly (perhaps as a response to state regulators and 401(k) recordkeepers like Fidelity cracking down on Pontera's original technology)

Read the analysis about these announcements in this month's column, and a discussion of more trends in advisor technology, including:

• Wavvest, which built an 'all-in-one' AI technology solution for financial advisors, has also launched an in-house RIA based on that technology, which in light of the growth and funding success of 'digitally native' RIAs like Savvy and Farther (which are built on their own proprietary technology platforms) suggests that the economics of running an RIA might be better than those of selling all-in-one technology to RIAs
• Even as surging AdvisorTech categories like AI notetakers have raised hundreds of millions in investment capital over the last two years, platforms related to alternative investment distribution and support for RIAs have raised over $2 billion – showing that even though advisors may only allocate a small amount of clients' portfolios to alternatives, the revenue opportunity of participating in asset distribution still far outpaces that of selling SaaS solutions

And be certain to read to the end, where we have provided an update to our popular "Financial AdvisorTech Solutions Map" (and also added the changes to our AdvisorTech Directory) as well!

*To submit a request for inclusion or updates on the Financial Advisor FinTech Solutions Map and AdvisorTech Directory, please share information on the solution at the AdvisorTech Map submission form.

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Enjoy the current installment of "Weekend Reading For Financial Planners" – this week's edition kicks off with the news that a survey has found that, at a time when many financial advisors are leaning into comprehensive wealth management services, more than half of RIA client assets amongst respondents are invested in model portfolios. That said, advisors aren't necessarily taking a hands-off approach to portfolio construction, with advisor-built models representing the most commonly used (51% of model assets), followed by home-office models (20%), standard third-party models (17%), and third-party custom models (12%). Which suggests that many advisors are seeking ways to free up time to focus on other planning (and business management) responsibilities while remaining 'hands-on' with the investment management process.

Also in industry news this week:

• A significant increase in the minimum asset size for referrals in Charles Schwab's Advisor Network program could lead some firms to reevaluate their participation (and perhaps their overall custodial relationship with Schwab)
• The SEC this week submitted a proposal that would expand retail investor access to private market investments that have long been the purview of institutional and wealthier investors

From there, we have several articles on retirement planning:

• How safe withdrawal rates can increase significantly as retirees' time horizons shorten
• How putting a financial plan for a retired couple through a 'widowhood stress test' could identify potential weaknesses when one spouse (unexpectedly) passes away
• Why some retirees might gain peace of mind by creating an asset 'bucket' for potential long-term care expenses

We also have a number of articles on practice management:

• A five-step process to better delegate 'outcomes' within an advisory firm (and why doing so could be more impactful than 'just' handing off individual tasks)
• Ways advisory firms can integrate new planners into client meetings, from identifying good-fit clients to leaning into their cash flow expertise
• Six ways firms can get a faster return on investment from a new associate advisor, including by delegating responsibilities in areas such as client onboarding and plan updates

We wrap up with three final articles, all about the costs of home ownership:

• How financial advisors can help clients consider whether to follow through with a major home remodel, from identifying the tradeoffs from making such an outlay to determining the best source of assets to pay for it
• While many homeowners enjoy having green space on their property, lawn upkeep can come with significant 'hidden' expenses
• How prospective home buyers can conduct due diligence on a homeowners or condo association to avoid stress and save money down the line

Enjoy the 'light' reading!

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If the initial stages of building a firm are mostly about survival and prospecting, and the middle stages are about scaling teams and processes, then the latter stages of the firm become about determining what is "enough". This is especially true as the firm is able to do more complex work for higher-paying prospective clients, meaning that each new client can pay a not-insubstantial amount… to say nothing of the headline-grabbing promises of acquisition multiples from private equity.

Given that firm revenue (and valuation) can have such meaningful consequences, advisors may be reluctant to slow their firm growth. After all, even if they personally feel that they have 'enough', advisors may (reasonably) be reluctant to leave money on the table.  In this 198th episode of Kitces & Carl, Michael Kitces and client communication expert Carl Richards discuss how to navigate the urge to grow for just a 'little' longer against the real-world multiples. After all, the issue is less maintaining growth for a year or two… but that advisors may continue to move the goalposts to justify growing for a "little more" before they dial their work back. This can create a perpetual cycle where the advisor is 'almost' to the end all the time.

Advisors can start with clarifying their business purpose and their end goal. There is nothing wrong with continuing to build a larger business – or even enjoying the challenge of growth – so long as advisors are clear with themselves as to what they are building towards. There can always be another tier of clients, fees, team, and revenue to reach – so advisors must carefully consider where they direct their energy. This mindset can be especially clarifying when presented with new business opportunities as advisors consider what will move them closer or further from their goal.

Ultimately, after a certain point, advisors must clarify within themselves what purpose their business growth ultimately serves. Whether that purpose is building a legacy, helping as many families as possible, or spending more time in the community, that in turn can be used as a guiding light… not the promise of 'more'. In the end, advisors who can be discerning and consistent may find themselves building a practice that enables them to live more of the life they imagined!

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We often tend to think of giving from one generation to the next in terms of inheritance, with a parent passing on their assets after death. However, some parents (who are confident that they have more than enough funds to last their own lifetime) want to be more proactive in giving to the next generation. Which in some cases is because of a desire to witness their children enjoying the gifts they've been given, but is more commonly done in order to set the child up for future security, happiness, and fulfillment – e.g., by funding their college education or gifting funds for a down payment on a home.

In practice, this type of intentional giving tends to fall into one or more 'eras' according to when the funds are intended to be spent by the child. Many parents focus on higher education savings or supporting their children's lifestyle expenses during young adulthood. A smaller number of higher-net-worth families are focused on dynasty creation, i.e., setting aside funds to be used by multiple future generations. And nearly all parents do some amount of small-dollar giving to their young children, from allowances to birthday gifts to visits from the Tooth Fairy.

However, few parents tend to focus on saving for their children's retirement – often because the parents themselves won't necessarily be around by the time their children reach retirement age. This is notable given the recent launch of Sec. 530A "Trump Accounts" (TAs), which are explicitly designed for retirement savings on behalf of young children (given their rules that closely mirror those of IRAs, other than the ability to contribute regardless of whether the child has any earned income). Government promotional efforts have emphasized how much can be accumulated in TAs over decades of saving and compounding, and planners have noted the option for Roth conversions after the child's age 18, allowing for many decades of tax-free growth – raising the question of whether parents should think about saving for their children's retirement, in order to take advantage of the tax benefits of TAs.

However, the reality is that despite the potential for significant asset accumulation by the child's eventual retirement age, TAs remain just one of a variety of account types available for intergenerational giving. And because each account type has its own set of tax characteristics and incentives for specific types of savings, the 'best' account for giving depends more on what type of giving best aligns with the parent's philosophy of how to invest in their child's future happiness and wellbeing, rather than which one will result in the highest after-tax dollar figure.

For example, some parents may be convinced that a college and/or postgraduate education is the best way to set their children up for a career that will be financially rewarding and personally fulfilling (at which point they'll be able to adequately fund their own retirement savings) – suggesting that a 529 plan and its tax-free withdrawals for higher educational expenses may be the most tax-efficient way to fund that goal. But other parents might see more value in 'pre-funding' their children's retirement, which gives them the ability to take risks and/or pursue more personally fulfilling (though perhaps less lucrative) careers without having to worry as much about financial security – in which case TAs might really be the 'best' option available.

The key point is that there really is no single 'best' account for intergenerational giving, as different accounts – from 529 plans and TAs to UTMA/UGMA taxable custodial accounts to child-owned Roth IRAs to irrevocable trusts – are each tax-advantaged for certain goals, but may be tax-disadvantaged for others. And so the decision to use one (or more) account type is ultimately more about what the parent hopes the child will eventually do with it, rather than which one could (theoretically) accumulate the highest balance in the end!

And if you want to go deeper on this topic, hear directly from the author on the Financial Advisor Technician podcast .

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My guest on today's podcast is Andrew Rosen. Andrew is the executive chairman of Diversified, LLC, an RIA based in Wilmington, Delaware, that oversees approximately $3.6 billion in assets under management for 2,500 client households.

What's unique about Andrew, though, is how he has navigated career and business decisions using what he calls a "pillow test" that helps him assess all angles of a given choice and ensure that his ultimate decision aligns with his or his firm's values.

In this episode, we talk in-depth about how Andrew not only considers the implications if a particular decision goes 'wrong' but also what would happen if it goes 'right' (including the follow-on effects for the business), how Andrew applied this framework earlier in his own career by choosing to accept a job offer from a smaller RIA (which offered a much lower salary but significant professional and financial upside) rather than one from a larger financial firm (which offered a higher salary to start but might have come with a more limited set of professional opportunities), and how Andrew has also applied his "pillow test" when thinking about potential private equity investments in a firm (as even if everything goes 'right' with the transaction, it could still involve a loss of control and a potential clash of values).

We also talk about Andrew's journey towards ownership at Diversified, which started with him working as an advisor before eventually buying out the firm's founder alongside other advisors on the team, how Andrew and his partners have adjusted the firm's ownership structure over time to ensure fairness to all parties (and how working with industry consultants has helped the firm shape its approach), and how Andrew's firm has incorporated acquisitions into its growth strategy (and how he applies his "pillow test" to them).

And be certain to listen to the end, where Andrew shares how he decided the time was right to hire an external CEO who could focus on running the business so that he and his partners could focus on what they do best in working with clients, how employing "radical candor" has allowed Andrew to support team members' development, and how Andrew has found that relationship skills can be just as important as technical skills when it comes to winning the trust of prospects and clients.

So, whether you're interested in learning about a framework to make hard career and business decisions, navigating equity ownership with multiple partners, or making the decision to hire a CEO to take charge of business operations, then we hope you enjoy this episode of the Financial Advisor Success podcast, with Andrew Rosen.

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Over the decades, the work that financial advisors do has changed considerably – from product sales to investment management to more 'holistic' financial advice and behavioral coaching. As the advisor's offerings have shifted, so too have their fee models: product sales have evolved towards an assets under management (AUM) model. Some of today's advisors, facing a plethora of fee options, have opted to leave the AUM model behind – marking the rise of fee-only financial advisors.

In this article, Sydney Squires, Senior Financial Planning Nerd, discusses the challenges – and opportunities – of various fee-only models, and what advisors who are looking to scale these models can do. "Fee-only" can comprise many different things: advisors who bundle AUM fees to include financial planning and investment management; flat-fee advisors who charge a combination of retainer, hourly, and project-based fees for their work; and advice-only advisors who do no investment management whatsoever. Flat-fee, subscription, hourly, and project-based models offer an alternative by more directly connecting what clients pay with the advice they receive. For that reason, flat-fee models can be particularly well-suited to clients with more investable assets, who may be more sensitive to AUM fees overall.

At the same time, the fundamental challenge is that relative to AUM-model advisors, flat-fee advisors often do a comparable amount of work – while generating substantially less revenue per client. Hourly pricing illustrates the gap particularly well: advisors charge an average of approximately $300 per hour, yet spend nearly 2 hours on unbillable activities for every billed hour. Meanwhile, an advisor who charges around 1% and spends roughly 21 hours annually servicing a $1 million AUM client effectively earns about $500 per hour. Accordingly, the viability of a flat-fee model depends less on whether advisors can charge flat fees, and more on whether those fees are priced appropriately. After all, a flat fee must not only cover client meetings and plan preparation, but also prospecting, marketing, compliance, administration, implementation support, and other unbillable work. Tracking time – even for a month – can reveal how much work actually goes into servicing each client (especially new clients).

These issues are part of why many fee-only advisors end up incorporating AUM into their pricing, as it can be a useful proxy for client complexity and help the advisor ensure that their revenue increases over time as their experience grows. If advisors want to avoid this and remain completely flat-fee, doing so may require adjusting fees to reflect client complexity – especially as the value of their expertise (and time!) grows and client needs shift.

Ultimately, flat-fee advice does not need to mean lower-fee advice, but advisory firms must be thoughtful about implementing mechanisms for revenue growth within their own practices. As a starting point, advisors can ensure that they set consistent business practices about how frequently price increases take effect, and how those adjustments are calculated. This is especially important in years when the advisor implements new service offerings, but also included in this value is their growing experience and domain expertise. In short, advisors who accurately understand the true cost and value of their work, price to reflect client complexity, periodically raise their fees, and protect against uncompensated scope creep can build a flat-fee practice that is both financially sustainable and aligned with delivering valuable advice to the clients they are best equipped to serve!

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Enjoy the current installment of "Weekend Reading For Financial Planners" – this week's edition kicks off with the news that Vanguard is planning to acquire RIA custodian Altruist and how it is likely to send ripples across the wealth management and asset management spectrum. While it immediately provides Altruist with the backing of an enormous asset management firm and Vanguard inroads into the RIA custodial space with a tech-forward offering, it could also put pressure on the largest RIA custodians Charles Schwab and Fidelity to up their level of service in the competition for RIA business and provide a boost to certain ETF providers looking to distribute their products to RIAs while avoiding fees charged by the major incumbent custodians.

Also in industry news this week:

• Consumers are prioritizing trust when it comes to selecting a wealth management provider, according to a recent survey, with service and fee transparency, as well as identity and account security, being key contributors to demonstrating this attribute
• Member satisfaction with Medicare Advantage plans dipped for the second straight year, according to a recent survey, highlighting the value of financial advisors in helping clients select the best Medicare option for their needs (and in making a change when necessary)

From there, we have several articles on investment planning:

• Evaluating the types of clients who could benefit the most from investments in Treasury Inflation-Protected Securities (TIPS) at a time when long TIPS offer real yields greater than 3%
• Why it's important to keep a client's investment time horizon in mind to avoid surprises when choosing individual TIPS or investing in a TIPS fund
• How advisors can incorporate inflation trends into portfolio management conversations with clients

We also have a number of articles on advisor marketing:

• How Facebook advertising campaigns can provide flexibility and data to inform a firm's broader marketing approach (but might not produce instant leads)
• How firms can use geographic market data to determine whether to emphasize a local SEO strategy or one focused on an ideal client type
• Four ways advisors can appear more often (and authoritatively) in AI answer engine search results

We wrap up with three final articles, all about next-generation wealth:

• Why some wealthy parents are sending their young adult children to retreats where they can learn about wealth stewardship and compare experiences with peers
• The growing popularity of (sometimes high-cost) 'gap years' and how they fit alongside college plans
• While many parents are worried that financial transfers to adult children might reduce their motivation, creating an income 'floor' could help them pursue a meaningful life path

Enjoy the 'light' reading!

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One of the most challenging realities of retirement planning is the risk that long-term care needs in the final few years of life can consume a disproportionate amount of a household's entire retirement savings. At best, this culminates in a fear that someone might not be able to afford their desired level of care in the later years. At worst, it is paired with the rapid depletion of existing assets, which can impair the subsequent standard of living of a surviving spouse, or 'unexpectedly' deplete assets that might have otherwise gone as an inheritance to family members. Yet the so-called "Medicaid planning" tools in the financial planner's toolbox to navigate this situation can quickly pit competing interests against one another, as strategies that preserve assets for heirs can outright limit the availability of assets to provide for a desired level of care while the individual is still alive. Putting financial planners into the awkward position of crafting recommendations in ethically complex situations.

In this guest post, David Haughton, VP of Estate Planning at Carson Group, explores the ethical dynamics that financial planners must navigate when crafting Medicaid planning recommendations to clients.

The starting point is to recognize that to the extent Medicaid was designed as a needs-based government benefit (i.e., to provide for the care of lower-income individuals who could not provide for themselves), proactive "Medicaid planning" involves finding ways to reduce the assets of the individual who may otherwise need long-term care support, before those assets are otherwise spent outright on care itself. The tools are varied, including transferring assets into Medicaid trusts, or gifting outright to family members, or the use of Medicaid annuities to convert the institutionalized spouse's assets into the non-institutionalized spouse's income. But the common thread is that assets no longer held in the individual's name are no longer required to be spent on care… for which the caveat is that often they literally cannot be spent on care.

The end result of this planning is that strategies to preserve assets for a non-institutionalized spouse, or future heirs, come at the 'cost' of reducing the assets available to spend on care if desired. In many cases, this may mean restricting the range of facilities available (to only those that accept Medicaid), or the tiers of additional care services that may be chosen (that aren't available in a primarily-Medicaid facility). Which is especially concerning when often the planning process begins with an adult child, thrust into a decision-making situation after a parent's health event, who must now make decisions for their parent's care with a direct impact on their own future inheritance.

The added complication is that for many financial advisors, our own compensation systems can present an additional conflict of interest in the process. Some tools – such as Medicaid annuities or asset-based long-term care policies – compensate insurance-licensed advisors who can receive commissions, but not fee-only advisors. Other tools – such as Medicaid trusts – do the opposite, preserving assets that can be managed by advisors who are paid on assets under management. Which means at the least, advisors must be mindful of their own compensation conflicts of interest in navigating recommendations.

So what should advisors do? Ultimately, the key is to engage in proactive conversations with all stakeholders – ideally including parents and children (while still recognizing which, in particular, has hired the advisor as the client, to whom the advisor owes their primary fiduciary duty) – to ensure that all trade-offs and potential priorities are considered. And then ensuring that not only are recommendations documented, but all the strategies that were considered, and the trade-offs that were discussed.

Ultimately, the key is to recognize that Medicaid planning is, perhaps even more so than other types of financial planning, rife with trade-offs for which there are no clear answers. And because multiple family members are involved, the trade-offs aren't even a matter of just one person evaluating a trade-off (e.g., "should I spend less now to be able to save more for a higher standard of living in retirement?"), instead the decisions have impact across multiple people (an individual in need of care, his/her spouse, and their children or other heirs), each of whom have their own competing interests. Which raises the bar for how thoroughly advisors must explore – and document – the range of strategies that were considered, and how the trade-off decisions were made when there is no single right answer.

And if you want to go deeper on this topic, hear directly from the author on the Financial Advisor Technician podcast .

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My guest on today's podcast is Sheri Fitts. Sheri is the founder of Sheri Fitts and Co., a marketing, event, and consulting business that works alongside financial advisors and firms.

What's unique about Sheri, though, is how she helps financial advisors develop their personal brands to both stand out in the eyes of good-fit clients and to ensure their work is in sync with their values.

In this episode, we talk in-depth about how Sheri finds that intentionally cultivating a personal brand is important because an advisor will already have a brand (whether they like it or not), why Sheri suggests that a first step to establishing a personal brand for a financial advisor is to go where the ‘yeses’ are and investigate what made the last few new clients the advisor onboarded want to work with them, and how Sheri has found that these reasons can be illuminating to advisors because they show what clients truly value (and the attributes the advisor might want to lean into further in their marketing).

We also talk about how Sheri sees the next step in brand-building as identifying the client segment that both meshes with the advisor’s strengths and brings them joy to serve, why Sheri recommends that advisors then determine whether this particular client segment represents a viable market (perhaps aided by AI tools that can help find data on how many individuals might fit into this group and where they congregate), and how Sheri finds that experimentation can be a valuable (and low-cost) tool when building a brand (for example, by meeting individuals in the chosen client segment to find out whether the financial issues they face are a good match for the advisor’s strengths).

And be certain to listen to the end, where Sheri shares the value of being bold when it comes to building a personal or business brand, how Sheri has found that identifying one’s sense of purpose is key not only for making career decisions but also in constructing an advisor’s brand, and how Sheri’s own business-building journey has demonstrated the benefits of taking risks as long as they align with one’s values.

So, whether you’re interested in learning about building a personal brand, leveraging that brand to attract more good-fit clients, or how to overcome doubts about narrowing the field of potential clients you could serve, then we hope you enjoy this episode of the Financial Advisor Success podcast, with Sheri Fitts.

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When selling a business, it's only natural to want to negotiate for the highest price you can. In the context of the advisory business, this has led to a growing focus on the "going rate" valuation multiples of revenue or earnings (EBITDA), with advisors asking what they can do to maximize the overall sale price for their firm. Yet the caveat is that when it comes to the sale of advisory businesses, deals are almost never structured with the total purchase price paid at closing. Instead, deals are commonly structured with a significant component of the purchase price to be paid out years after the closing, and only if the seller meets certain milestones, which can be challenging to achieve. Sellers who gloss over or misunderstand these nuanced deal terms can receive less than they originally envisioned when negotiating the deal, such that what sellers "expect" to receive as a valuation multiple when the deal is struck may be substantively different than what they actually receive in the end.

In this guest post, Rich Chen, founder of Brightstar Law Group, explores how today's serial acquirers of advisory firms commonly include retention, earnout, and other post-closing contingencies that can materially shape what sellers will actually receive for the sale of their firm.

The first key to recognize in evaluating the offer letter for an advisory firm acquisition is that in today's environment, deals are rarely ever paid out fully in cash at closing. At best, only 80% of the deal may be paid when the transaction closes, and in many cases as little as 50% or even just 25% of the deal occur in cash. Which at the very least, means advisors must adjust for the time value of money, at a reasonable discount rate (that reflects the risk of being an implicit creditor of the acquirer!), for the fact that much of the proceeds may take as many as three to five years to be paid out.

However, scrutinizing deferred payments is not just about the fact that they are delayed, it's that depending on the terms, they may never be paid, as they are commonly subject to contingencies of how the deal itself proceeds after closing.

For instance, acquirers often defer payments based on retention requirements, that a certain number of clients (or more commonly, a certain percentage of revenue) must be retained after closing, for at least 1 year and sometimes as long as 2-3 years after closing. Which not only creates an outright hurdle for sellers to navigate – in staying onboard and engaged enough to ensure clients stick with the transition – but an additional challenge in that sellers don't necessarily control the environment that they operate in after the deal closes! Clients may have outflows due to taxes, or a divorce, or terminate due to dissatisfaction with the new acquirer, and the seller is at risk. A market decline could cause clients to leave, or simply depress revenue (calculated on assets under management), and while some firms do offer a "market-neutral" revenue retention clause (where changes in market returns are backed out), that adjustment can turn out to sting if the markets went up and might have otherwise preserved the retention payment against other client outflows!

An even greater challenge in many acquisition situations are earnouts, which require not just retention but a certain "threshold" rate of growth (typically calculated as a Compound Annual Growth Rate, or CAGR) for several years after the closing. Which is difficult both because of the challenges of compounding – a 20% CAGR amounts to a requirement that the seller must 2.5X the business in 'just' five years to meet the earnout (and if they could 2.5X the business that quickly, should they have even sold it!?) – and also because the seller must achieve growth goals in a firm that they no longer control (which could change its investment strategy, or its pricing, or its staff support… and the advisor simply has to do their best with the situation). And many acquirers also retain the right to terminate the advisor, with or without cause… potentially curtailing their ability to achieve the earnout targets at all.

The good news is that at least some retention, earnout, and post-deal employment terms (with restrictions on terminations without cause) can be negotiated with buyers. And awareness of the importance of the terms, and how they work, makes it easier to compare and contrast different Offer letters that may have different structures. Still, though, the key point is that it's not enough to 'just' focus on the valuation multiple the business is receiving in the first place, because what matters is not what the deal is worth "on paper" when it closes, but what the seller actually receives in their pocket in the end!

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