Getting a small RIA's records ready for a sale, merger or successor
When a small RIA is sold, merged or handed to a successor, the other side wants to see clean records: who the clients are and how households are grouped, what each account is managed to and since when, signed agreements and IPS documents, how fees are calculated, and the compliance registers. An owner who keeps these current and in one place makes the practice easier to value, faster to review and smoother to hand over. Start years before any deal, not months.
Most small RIA owners think about succession as a valuation question: what's the practice worth? The buyer's first questions are usually more practical. Show me the client list. Show me how fees are calculated. Show me what each account is supposed to be managed to. Show me the compliance file. If those answers live in five tools and the owner's memory, due diligence gets slow and uncertain.
What will the other side ask to see?
| Area | What they look for |
|---|---|
| Clients and households | Who the clients are, how accounts are grouped, who has authority on each |
| Agreements | A signed advisory agreement for every client, matching the fee charged |
| Fees | The schedule, exceptions, exclusions and the calculation behind recent bills |
| Investment management | Models with versions and dates, each account's strategy of record, IPS documents in force |
| Trading | A trade record tied to strategies, with errors and corrections documented |
| Compliance | Written procedures, registers and logs, the annual review, complaints and how they were handled |
What should an owner do now?
- Put the client record in one place, with households and accounts correctly grouped.
- Check every client has a signed agreement that matches what they pay, and record every fee exception with its reason.
- Write down each model and date every change, so the investment history can be shown.
- Keep the compliance registers current, so the file reflects the firm as it is, not as it was rebuilt for a buyer.
- Run a records drill once a year, picking a household at random and seeing how fast its records come together.
A worked example
Take a hypothetical solo RIA whose owner plans to hand the practice to a junior advisor in about five years. This year the owner moves client records out of a spreadsheet into one system, finds four clients whose agreements don't match their fee, and gets amendments signed. Then comes a one-page description of each of the firm's three models and dates the last change to each. When the successor starts reviewing the practice, the questions are about clients and strategy, not about where things are.
What are the common gaps?
- Fee arrangements that exist only in the owner's head.
- Model changes that were never dated.
- A compliance file assembled in a hurry before the deal.
- Client authority and contact details out of date.
When is this overkill?
If you have no plan to sell or hand over the practice, much of this is still worth doing for continuity and for your own regulator. The steps are the same either way.
How Advorra fits
Advorra keeps clients and households, versioned models and the dated strategy of record, IPS documents with every version kept, billing with exclusions and every run on a billing blotter, a trade blotter and the compliance registers in one place, with a records-production pack. So the records a buyer or successor asks for are already together. See the product page, or read about a continuity plan for a solo RIA and the records-request drill.
One thing to do this week: pick five clients at random and check each has a signed agreement that matches the fee you charge.
An operations guide, not legal, tax, valuation or compliance advice.
Questions advisors ask
When should an owner start preparing records for succession?
Ideally years ahead. Records kept well over time are far more convincing than records cleaned up just before a sale.
What do buyers usually look at first?
Typically the client list and revenue, fee arrangements and agreements, and how investment decisions and compliance are documented. Each deal is different; your advisers will tell you what yours needs.
Do clients have to agree to a change of adviser?
Advisory agreements often address assignment, and client consent rules apply. Talk to your attorney and compliance consultant early.
Does this affect valuation?
Clean, consistent records tend to make due diligence faster and reduce uncertainty for a buyer. Valuation itself is a question for a valuation specialist.
Is this legal or financial advice?
No. It is an operations guide.
See it on a demo firm
Advorra is practice software for independent RIAs: clients, models, IPS, billing and compliance records in one place, on top of the custodian you already use. Built by The CollabHub.
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