Stop Guessing: How AI-Driven Acquisition Scoring is Changing RIA M&A

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• LinkedIn: Chip Kispert

RJ Malyk 0:04 

Well, we’ve got another BPN Insights podcast lined up for you with your host, Chip Kispert.
I’m your producer, RJ Malyk. 

Chip, looks like you’re ready to go, so why don’t you introduce your guest and tell us what you’ll be discussing on this edition of the BPN Insights podcast? 

Chip Kispert 0:18 

Well, RJ, thanks for that intro. And for everybody out there, welcome to BPN Insights.
I’m Chip Kispert, and today we’re talking about the uncomfortable truth of growth in the RIA marketplace. 

Many RIA firm owners are not really honest with themselves. They point to organic growth while their enterprise value is actually bleeding out. 

The data shows a 93% growth gap between firms playing offense and those sitting on the sidelines. 

Joining me is the man who built the lie detector for these metrics, Julien Baneux, founder of the RIA Growth Catalyst. 

He’s the research behind the RIA Real Deal, a gut punch report showing serial acquirers crushing it at 185% AUM growth. 

While everyone else flatlines, Julian walked away from roles at IEQ Capital, Crested Asset Management, and Certuity to build the AI platform that is separating winners from pretenders. 

Julian, welcome. 

Julian Baneux 1:27 

Thanks Chip.
It’s a pleasure to be here. 

Chip Kispert 1:29 

Well, Julien, in this episode we’re going to cover why the organic model is a slow-motion death sentence for some advisors. 

We’re also going to touch on how AI cuts through 14,000 RIAs to find the real alpha.  

Also, we’re going to have why cultural fit is often an expensive excuse for bad data.  

And then we’re going to close with your Beacon BPN flash, your 60 seconds of unfiltered truth. 

So I’m so excited to chat with you. 

We have so much to talk about.
Let’s get right at it. 

Julien, you walked away from the safety of some absolutely fabulous firms to build the RIA growth catalyst. 

What was the specific dirty secret about how I how RIAs were sourcing deals that made you realize the old way of doing business was debt? 

Julian Baneux 2:27 

I noticed a consistency and it was that firms were raising a staggering amount of capital and debt to go and start this journey. 

And it looked to me that they didn’t really know what they were doing. 

They were kind of throwing darts at a board, you know, with the ability to write 789 figure type of checks to acquire entire companies. And the way that I compare it is seemingly to a person that’s gambling in a way, they’re they’re taking a, you know, a, a big bet on a structurally strategical decision that wasn’t based off of the math. 

It was based off of gut instinct. And I’ve seen this enough times and it feels like the right choice. 

And to anybody that’s going to be investing in someone to write a check that big, they’re going to want to see more than that. 

So that’s what really started this. 

And I noticed that these inexperienced firms were getting up this large amount of funding and they were deciding to either one, sit and not really take a position and it would start to erode their enterprise value. 

Two, they were taking extraordinarily risky bets and hoping some of them worked out, which usually, you know, if you’re taking that level of bet sizing doesn’t usually work out. 

Or three, they’re just trying to follow what everyone else does and that’s a easy, surefire way to get lost into the fray. 

And the fourth one’s, the last one doesn’t happen often, but they would just cheat and try to get some advantage or corner that, you know, regulators typically frown upon. 

So those are the four ways people are approaching this and they weren’t doing a fifth one, which is taking a data-driven statistical approach based off of hundreds to thousands of acquisitions who have already happened in this space. 

So that’s what I set out to do. 

Chip Kispert 4:22 

I think it’s fabulous. 

It’s it’s interesting because as I, you know, you look at some of the traditional data sets, you know, and oh, here’s the name, here’s the firm, here’s it’s all based on high level data, right? 

It’s not diving into to richer data. 

And you know, as I’ve looked at your program and spent some time with it, you got some serious detail in there. 

Julien Baneux 4:48 

We take a lot of pride in that trip and it’s, it’s because we’re not a data platform for all types of use cases. We’re for the MNA use case. And by doing so, we add MNA specific data points and on top of that, the insights that come from those. 

So that’s where we need to spend our time, our focus right now. 

And we find that it adds the most value for our clients. 

Chip Kispert 5:17 

That’s terrific. 

So you’ve also done some serious research recently, right? 

Your recent research, the RIA Real Deal really is, is a gut punch to a lot of RIAs as you found that those serial acquirers are growing at nearly 10X the rate of everyone else. 

I talked about, you know, I mentioned it earlier, 185% AUM growth versus 11% for non acquirers. 

Why is the organic only model essentially a slow-motion death sentence in 2026? 

Julien Baneux 5:52 

So with this topic, I’ll start with my organic take and then we’ll talk about the inorganic side because they actually connect to each other and it’s important to discuss the commoditized portions of these firms that are wanting to grow organically. 

I we find that they’re focusing on the basic functions of wealth management as their differentiators and not evolving their service offering or niching down into the specific pains and their solution to those pains for the clientele that they want to focus on. 

And the way that this leaks over to the inorganic side is if you can’t evolve your service offering and or niche down into those clientele, then you cannot continue to gather more market share in those areas of an, of an ever competing and ever-growing field of wealth management. 

What wealth management was five, even, I mean 10 years ago, let alone five years ago has started to change. 

And I think as we go through this succession, this wave of succession, which will continue to happen, has started to continue to happen over the next 10/15/20 years. 

What we’re going to see is the tastes and the preferences of who the end client are going to continue to change. And the wealth management firms that can continue to evolve with that and serve their needs are going to be the ones who can get on top. 

And this is where this gets over to the inorganic side, which is more along the lines of if you’re not pairing your inorganic strategy with this approach, you’re not continuing to attract the advisors and the firms to come and join you in accomplishing that larger journey. 

Chip Kispert 7:38 

Interesting, interesting. 

It, you know, it’s, it’s funny because there, there are a lot of RIAs out there right there. You, you know, earlier we, we chatted about 14,000 RIAs in this country. 

We all know a lot, most of them are lifestyle businesses, right? 

But how does your platform really use AI to cut through the noise, identify the, the, the actual alpha, the firms with really with a proprietary acquisition score. 

Worth taking a look at? 

Julien Baneux 8:16 

Right. So we’ll start with the proprietary acquisition score and some of the other metrics and the key items that fall within it and a little and next to it as well. 

So the proprietary acquisition score, which again is, is public now it’s, it’s in patent process. We’re near the issuance, which we’re excited about. 

It is based off of hundreds to thousands of acquisitions who have already happened in the space and all those firms as they were leading up to those acquisition points. 

And it doesn’t drill down and say, OK, well from my years of experience doing M&A, these are the direct criteria points of firms that are most likely to be accretive to an acquisition. 

It doesn’t do that at all. 

What it looked at is of all these firms who have historically been acquired, why were they acquired? 

What drove them to be acquired on an individualized firm basis and then find the consistencies. 

It is a kind of, it is a chicken before the egg approach in a way and not the egg before the chicken. 

So we’re able to actually back into what drove the firms to be acquired and then projected out into the current market on an individualized basis. 

And those are a bit different for every firm. 

We’ve seen 200 million AUM firms to be acquired. We’ve seen four or five billion AUM firms to be acquired. 

So AUM is not always a main driver. It’s a lot of different factors within which include of course net of market AUM growth, that’s a big one. 

And the way we determine market is through a 60, 40 sixty percent S&P 40% Bloomberg Bond aggregate, it is net of market and acquisition AUM. So if you’ve acquired individual advisors or firms in that year, we actually pull that, pull that out to show what are you actually organically growing and then of course the net of new client growth over time, so net new assets and net new clients. 

Chip Kispert 10:11 

So let me ask this question, right? 

So you did all that work. What were the reasons for acquisition? 

You provide the, you know, framework, you highlight, hey, these you know, are are hot, so to speak, they’re in that top 10% that you may be interested in. 

Are you allowing the acquirer to basically also create their own profile to match against this? 

Julien Baneux 10:44
Yeah, great question. 

And we’ve gotten this one quite a bit because our, our clients are pretty sharp acquirers that say, well, hey, am I going to start competing with everyone else on the same deals? 

Because I I get very valid question and thanks for the giving me the chance to kind of hone in on the our answer for that. Because the markets definitely asked us a, a consistent amount of times this exact question. 

And the way that we, we approach this is it’s tailored. So the out-of-the-box model is based off of what has historically been successful. But we can tailor it on an individualized basis whereby it shows you the acquisition likelihood over time of what the market model looks like as well as the one specific for you. 

So you can know on a two-sided sense, what does the market see as a very high quality target that may not be a good fit for you? And then what does the market see as maybe not the best part target that is a perfect fit for you? 

So we do we we we see that as a great way that we differentiate differentiate ourselves from maybe some of the other data providers that, you know, create their own concoction or score in house that is not tailorable based off of your exact guidance. We can. 

Chip Kispert 12:01  

Interesting. 

So and this is an assumption on how potentially you could could use your AI. But if we continue to go down that rabbit, this rabbit hole a little bit, are you able to then show kind of the gaps between how you look at this, how you built what I’ll call the aggregate score, right? 

And then how the acquiring wealth firm or PE firm is looking at the things that are important to them. 

Julien Baneux 12:37 

Right. There’s, there’s definitely lines that we’ve drawn. And one great statistic that we continue to return back to as we tell people about our, our model as well as the tailored one is our model predicts out acquisitions with a very high confidence 6 to 12 months in advance. 

I mean, we’ve back tested it and we’re at over 75 to 80% of the time we’re able to know well in advance who gets acquired. 

So that is a mind blowing level statistic. 

Now firms get acquired for a plethora of different reasons. Sometimes it might just been a a great service that they provide that’s a perfect fit for a particular acquirer, but maybe not on the historical sense and maybe it’s more on the individual acquire basis. 

That’s that’s the reason some firms get acquired that are like 50 or 60% not as top tier, top quartile, but it happens. 

But now when you go down to the tailored acquisition scores, this gives our acquirers the ability to boil down the space of what fits perfectly for them in a matter of minutes to save them hundreds of hours a year in spinning their wheels with, with clients or potential prospective acquisitions that are not a good fit. It’s incredible. 

Chip Kispert 13:51 

So, so powerful what you’re providing and, and especially when you compare it to what’s traditionally been out there, right? 

Here’s your list. Go figure it out. 

Here’s another area. Because I’m a big relationship guy, right? And you know, are you able to use data in such a way? 

Let me rephrase this. 

So we hear a lot when we’re talking to wealth firms. Well, it wasn’t a cultural fit when a deal dies, right? How much of that is just kind of a convenient excuse for firms that didn’t have the data to understand the target in the 1st place? I mean, how do you use data to prove culture? 

Julien Baneux 14:40 

Yeah, this is another you’re hitting the main questions we get, which is, which is fantastic and definitely set the expectation there. 

So on the on the cultural fit sense data doesn’t fill the entire story. If it were, then we would have fully automated M&A markets and that’s not the case. 

Data is a good chunk of the initial story. The last quartile is absolutely spending time with people and going through that. But on the front end, you can get initial signals. 

And here’s what I mean by understanding the age profile of a lot of the senior executive team, you can gather a lot more Intel on is this because they are they are they considering acquisition because they want to go on another chapter of their journey and join our team and continue to flourish and develop and grow. 

If they’re all 40, 45, 50 and have a little bit of a tail left or if they’re all 60, 65, 70, not making any judgement on that type of age range, but are they looking to more of an exit that they can succeed their book to a younger group of advisors? 

That gives you the initial signal for that. 

So that’s a lot of the information. It’s not the full story. You can never tell that unless you’re in person. 

But it’s some of the initial signals that are really value valuable. 

Chip Kispert 16:00 

You know, on another in another discussion, Julien, I’d really love to get into talking about succession planning. We don’t have the time to do it today, but that is a a subject that we are becoming very passionate about and you know, the strategies that go with it. 

So let’s let’s put that one aside and let’s come back to it later. 

But you know, one of the things kind of as I, I’m starting to, to wrap up our conversation here is, you know, success leaves a lot of clues, right? 

But most people are looking at the wrong map. 

Who are the two or three firms in the well space that you really admire for their M&A approach and, and sure, why? 

Julien Baneux 16:49 

So there’s the market leaders in M&A who have a consistent programmatic playbook. 

I think the creative planning team has done an outstanding job of being thoughtful on acquisition, having an opinion on what they’re looking for and what’s a good fit for them. 

So I definitely think Peter Mallouk is, is a leader on that side. 

But there are definitely smaller firms that are up and coming that I respect a lot in their approach. Merit Financial being one of them. 

Love their story. 

I mean, of course, who better to lead? 

Chip Kispert 17:20 

We have, we have a we have a number of the Merit people coming to our roundtable  

Julien Baneux 17:24 

Perfect and and not a surprise at all. 

Chip Kispert 17:26
We think they’re doing great too 

Julien Baneux 17:27 

Not a surprise. 

And I mean to, to have a president and leader that has a background in being actually acquired by that firm speaks levels to the amount of involvement in the care and dedication that they put in their acquisitions post acquisition. 

So that’s a big theme, which again, we could spend an entire episode talking about in terms of post acquisition integration and in, in involvement. 

But I, I have immense respect for, for Merit. They’ve also demonstrated their ability to be dynamic in acquisition targeting. They recently acquired a up and coming firm with a great YouTube channel. 

So they’re thinking strategically about this, not just saying we’re gonna go aggregate assets, which again, being a strategical M and a platform we have immense respect for. 

And the the another one I think is fascinating and upcoming are some like the Root Financial that had take a more tech approach to things. 

And I definitely think them Savvy and Farther are doing a good job at attracting advisors to their brand and platform, which going back up to what I mentioned earlier, they’re niching down into the right area to attract the advisors and their clientele that relate to a tech forward efficiency driven platform to serve them. 

So that’s where that inorganic pairs with the organic approach and brand. 

Chip Kispert 18:55 

So do you think, and actually, I’m asking your opinion here. 

Do you think that because of, you know, with, with the Savvy’s, the Farthers, their, their commitment to technology, right, their, their framework, do you think that’s enabling advisors to actually spend more time on what’s important talking to prospects and clients? 

Julien Baneux 19:19 

Oh, absolutely. 

I, I actually very much agree with Michael Kitsis in this regard, whereby it’s like, if you save me if this, if this technology that I’m going to implement saves me 25% more time. 

And let’s assume I was already at like, you know, near 100% capacity, that extra 25% margin that I have, I am not going to be doing far above and beyond more. 

I’m going to be going home either to my family to enjoy my own personal time or spending more time building relationships in person, spending real time with my clients. 

It’s not going to be like, oh, I have 25% more capacity, Therefore I’m going to do 25% net more. Again, I just I, I, I’m a very realistic person and I typically live these things through my own lens in my own life. 

So if I’m going to have 25% more, I’m going to enjoy 25% more. I’m not going to go in if I don’t need to get 25% more. 

Chip Kispert 20:15 

I, I understand that personally. 

Julien Baneux 20:17
Fair, very fair. 

Chip Kispert 20:20 

I understand this personally. 

So, all right, we’re coming to the end of our, of our session here. 

Julien, it’s flash time. All right? You got 60 seconds. No scripts, no safety net. Give our audience the one truth about the future of this industry that no one else is willing to say out loud. 

Floor is yours. 

Julien Baneux 20:41 

I’ll give you two truths and I’ll do it in 30 seconds. 

First one, over the next 10 years, the middle market of RIA is between 1 and 5 billion in a UM I think will cease to exist. I think the firms that are below a billion in our lifestyle businesses will continue to run, they’ll be aggregated and then the that towards the higher end of that 5 billion, you will see scale far past that as we’ve seen with Merit going on the more inorganic approach. 

That’s truth one Truth two, over the next 10 years, advisor movement in AUM from wirehouses and IBDs, a way to the independent side will eclipse the amount of full from acquisition AUM, and I think it’s not even going to be close. 

We’re going to just see that over the next 10 years and how it rolls out. I think OpenArc is just the beginning. 

Chip Kispert 21:28 

Interesting, very interesting. 

Julien, I loved your comments. 

They’re fabulous for leaders out RIA leaders out there who just had an aha moment. How can they reach you on my website? 

Julien Baneux 21:42 

If you want to schedule a strategy session or get to know me, you can do that directly through there. It’s connected to my calendly so you’ll connect directly with me or try out our free web app. 

Do your own research on firms, advisors, owners, all of that is publicly available so that anyone can use it and get their education they need to make better decisions. 

Chip Kispert 22:02 

And Julien, if you could forward that link, we’ll, we’ll make sure we get it on the on our media post here when we when we put it out here. 

Julien Baneux 22:12
Brilliant. 

Chip, thanks for having me. RJ, nice to see you. 

RJ Malyk 22:15
Well, Chip, that was a fascinating conversation between you and Julien. 

There was just a lot of information, a lot of it really made a lot of sense to me. And there were some of it that just went right over my head. 

Chip Kispert 22:29
Well, you know, in, in chatting with Julien over the last six months have really kind of learned that he, he, his, his model really is the next generation of helping M&A firms and those, those firms that are interested in acquiring RIAs a better way of, of you really segmenting the, the, the firms they want to go after. 

So I find it absolutely fascinating. I, I think what he’s doing is a game changer. And as long as he keeps the quality of data, it’s going to be, it’s, he’s going to be wildly successful. 

So as you, we always go back and forth and I like to take 3 or 4 ideas that that I took away from, from our time. 

And I think the first one is the middle is dying. If we look at it, the market has really bifurcated. 

You’re either a professional acquiring acquirer weaponizing data or you’re a firm losing value every single day. 

It’s interesting. Serial serial acquirers grew at 185% while non acquirers were at 11. That’s not a gap, that’s a chasm, right? 

And, and you know, I feel bad for those people kind of in the middle  

Number two, gut feelings are expensive. I talked, I talked about this with, with an advisor. We were running the roundtable last week. You know, relying on the relationships to define deals has limited success at best. 

One of the nice things about having AI driven scoring, you know, as long as your algorithm algorithms, right, is the only way to ensure you aren’t overpaying for mediocrity. 

And and that’s a big deal. 

Or you also can find, you know, the gems hiding in plain sight. 

So and then finally, 93% gap. That’s real. The growth chasm isn’t coming. It’s here. 

And if you don’t have an inorganic strategy backed by hard data, you really don’t have a growth strategy. 

It’s just that is, that’s coming out from the data in such a strong way. 

It’s fascinating. 

RJ Malyk 24:48 

Yet the last point you made was, was that that also jumped out at me. And it was interesting how he, how he presented that. 

I, I found that interesting. And he just, he has a lot of things there that I, like I said before, I was fascinated by and found it interesting. And then there’s some stuff I have a lot of learning to do. 

Chip Kispert 25:08 

Well, you’re, you’re on the fast track to learning as you produce more and more of these these podcasts with me. So that’s exciting. 

RJ Malyk 25:16 

Yes, absolutely. 

Chip Kispert 25:18 

All right. Well, I think it our time is up here for this BPN Insights episode. I do want to wrap on a on a big picture and one big idea I took from Julien. 

The RIA market has split in two, and you’re either playing offense with data-driven M&A or you’re watching your enterprise value erode while calling it organic growth. The 93% of firms sitting on the sidelines aren’t being cautious. They’re really being left behind. 

So before I leave to quote my one of my favorites, Ted Lasso, be curious, not judgmental. 

This is Chip Kispert. Wishing you well until our next episode of BPN Insights. 

RJ Malyk 26:04 

Love that quote, Chip. 

Thank you for checking out the BPN Insights podcast, which is brought to you by Beacon Strategies, LLC. For more information, visit beaconstrategiesllc.com. Until our next BPN Insights podcast for Chip Kispert and everyone at Beacon Strategies, I’m RJ Malyk.