Do ETFs Make RIA Firms More Valuable?

Would that (gently used) cherry of a 1970 Toyota Corolla fetch a higher price if its eight-track player has been upgraded to Apple CarPlay?

There’s a corollary for the advice business: Might deal-hungry private equity firms be willing to pay more for RIAs that have their own exchange-traded funds? A company that provides third-party services to help businesses launch ETFs says yes. But there’s some nuance to that, and adding new funds certainly isn’t the right move for everyone.

“Anybody buying an ETF business probably has deep pockets,” said Brittany Christensen, senior vice president at Tidal Financial Group, noting that the firm sees valuations for ETF platforms being eight to 10 times earnings multiples, compared with three to four times for most other wealth managers and asset managers. “If you become known for something or invent a category and are first to that market, that makes your business more attractive.”

Tidal Wave

That idea straddles two trends. The numbers of RIA deals and ETF launches are both at record highs. Last year, there were 322 RIA transactions announced, up from 272 in 2024, according to data from DeVoe & Company. And there were 1,167 ETF launches in 2025, up nearly 60% from the 736 in 2024, FactSet reported.

There’s also a subset of the ETF launch trend, which is the rise of 351 exchanges, where pools of appreciated assets (usually in stocks) are moved tax-free to ETFs at the time of launch. “So many ETFs have been launched in just the last two years. We will see closures … but you will see people who are shining or still innovating,” Christensen said. “Consolidation happens when an industry is growing, and growing healthily.”

But, advisors have to contend with two major aspects of the ETF business if they want in:

• Having an ETF lets them extend asset allocation services to people who aren’t already clients, and that can help with scale.
• But funds can be costly to run, and without $100 million or more, ETFs may not be self-sustaining.

Sounds Nice, in Theory: “I’ve always thought that turning our Green Sage Sustainability Portfolio into an ETF or mutual fund would be a great way to scale our portfolios, scale our impact,” said Peter Krull, partner and director of sustainable investing at Earth Equity Advisors, whose firm has a total of about $200 million assets under management. “But what we’ve consistently run into over time is expenses … We’ve never been able to make the economics work.”

Another firm, Sovereign Wealth Financial Group started a tender offer fund, which has limited liquidity. “Our mass-affluent clientele wanted exposure to alternative investments,” principal Charles Failla said about the choice of that wrapper. While 351 funds can make sense for some clients, it can be hard to argue that there isn’t already an ETF out there to address other needs, given that there are thousands on the market, he noted. Why RIAs roll out their own ETFs beyond 351s, “that, I don’t quite understand,” he said.