As a financial and investment advisor, your success comes from putting your clients first. But as you look to build and expand upon your success, it’s also important to understand the value of your firm. 

Valuation is a method for determining the market value of your firm. This can be utilized to determine pricing for stocks and internal perpetuation. Knowing what goes into the valuation of your firm is essential as you negotiate for the best deal.

Let’s explore some of the top considerations that will factor into your firm’s valuation:

  • General information on your firm: This includes details about your ownership structure, the value proposition, and the business services your firm provides, the historical revenue and growth trends your firm has experienced, the breakdown of your personnel expenses (salaries, bonuses, benefits, etc.), the technology your firm uses, the general expenses your firm accrues (office space, equipment, etc.), and any debt on your books.
  • Economic analysis and outlook: beyond any specific industry, how the economy is performing overall is another factor in valuations. This includes the GDP, Consumer Confidence Index, interest rates, unemployment numbers, small business optimism, and stock market performance.

Considering information on your firm, industry, and economic projections are some of the main, top-level approaches when valuating a firm. In order to take a deeper dive into determining the value of your firm, the following factors also need to be considered:

Valuation methodology

  • Income Approach: this is an estimate of your firm’s future cash flows discounted to present value at a rate of return appropriate for the investment
  • Market Approach: this approach looks at your valuation ratios derived from transactions of companies similar to your firm
  • Asset Approach: this is an analysis of your firm’s assets and liabilities and then restates the value of these assets from a historical cost to fair market value


  • Attrition Index: this refers to the number of clients that you retain, or fail to retain, over a given period of time 
  • Financial Quality Index: this looks at the performance of the stocks owned by your firm
  • Client Quality Index: as the name indicates, this index evaluates how successful your clients are
  • Adviser Demand Index: this is a complex indicator that factors in a range of data to determine the ratio of buying pressure to selling pressure. This indicator can ultimately be used to project how valuable your firm will be over time

Have a trusted team on your side

In summary, remain confident and maintain the pride you have in your firm. Collaborating with consultants, attorneys, or other advisers will help you to achieve your desired valuation. Most valuations take 60 days to conduct by an independent party. Upon finalization, Westfield Bank will collaborate with all partners to ensure your best interest is front and center.

We’re here to help you grow your wealth management firm. Westfield Bank’s team of bankers offers you experience and exceptional expertise in banking solutions for wealth management and investment planners.

Let’s work together to meet your firm’s goals