ECHELON Partners Releases ‘Seivert Report’ – Seminal Overview of Company Valuations in the Wealth & Investment Management Industry

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Interest rate hike and regulatory changes hit valuations, while alternative investments and wealthtech surge

We’ve identified several important trends in the latest edition of the Seivert Report that are driving valuation in investment and wealth management – a key resource for decision makers in these competitive times.

ECHELON Partners, a leading investment bank focused on the wealth & investment management (WIM) industry, announced today the release of the 2016 Q1 Seivert Report, the premier industry trends & valuations report for public and private companies in the WIM industry.

Designed to help financial services executives better understand the impact of macro trends on the valuation of both public and private WIM companies, the Q1 2016 Seivert Report highlights the most recent key developments. The Seivert Report surveys nearly 160 companies from over 10 different industry sectors focused on investment product development, distribution, and technology.

“The wealth and investment management industries are being impacted dramatically due to shifts in the global economy along with historic regulatory and technology change,” said Dan Seivert, CEO of ECHELON Partners. “We’ve identified several important trends in the latest edition of the Seivert Report that are driving valuation in investment and wealth management – a key resource for decision makers in these competitive times.”

Key findings of the Q1 2016 Seivert report include the impacts of the following industry trends:

  • The Fed Increases Interest Rates – After 7 years of market friendly monetary policy, the Fed raised rates by 25 basis points in mid-December 2015, which contributed to dramatic market volatility. This volatility impacted the wealth and investment management industries as the firms tracked by the Seivert Report suffered a 9% decline in aggregate equity value.
  • Regulatory Changes and Burdens – Banks continue to be impacted by post-financial crisis regulations, highlighted by a meager 3.7% return on equity and an 8.2% median decrease in share price. The pending Department of Labor fiduciary rule that promises to lower costs across the industry has also been cited as a driving force in many of the recent sales of independent broker-dealers.
  • Tech Surges - Innovation and increased demand have been a boon for financial technology firms. The Investment Processing Solutions sector, for example, has one of the highest EBITDA multiples (20.6), long term growth estimates (13.5%) and returns on equity (24.0%).
  • Valuation Premium for Alternative Investment Managers – Despite lackluster financial performance, the Alternative Investment Manager sector continues to lead the Seivert Report in the valuation metrics analyzed. Due to the combination of low interest rates and growing demand for non-correlated investments, Alts remain a preferred sector, evidenced by valuation multiples of 24.8 times EBITDA and 8.4 times revenues.

Other major trends detailed in the Q1 2016 Seivert Report include a number of difficulties that Regional Brokerages, Insurance Companies and Foreign Money Center Banks are experiencing, ultimately lowering the sectors’ valuations. Financial Media and Data Solutions along with Exchange and Trading Systems, however, are benefiting from the current climate, as their valuations continue to rise.

“This is clearly a tipping-point moment in investment and wealth management,” Seivert said. “Never before have we had as much change and tumult in what once was a fairly sleepy area of financial services. As a result, we are experiencing strong demand in our specialized services for providing valuations, investment banking and consulting specifically to investment and wealth management firms of all sizes.”

“The Seivert Report is just one of the many content resources we are proud to provide to continue the growth and success of the industry and help executives make the best decisions,” Seivert concluded.

About ECHELON Partners
Founded over 15 years ago, ECHELON Partners combines the high quality expected of a large investment bank with the high touch expected of a personal boutique. Unlike traditional investment bankers, ECHELON Partners brings together financial advisory, strategic consulting, and senior-level operational experience to each engagement. We believe the keys to successfully serving clients are a deep understanding of the wealth and investment management business, an extensive network of contacts, a powerful set of processes and databases, integrity, and trust. ECHELON Partners is committed to bringing all of these qualities to every client assignment. With a track record spanning hundreds of advisory engagements and valuations, our team understands the unique needs of owners and executives.

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Timothy Welsh
Nexus Strategy
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