For registered advisers
Nobody expects valuations to rise. Diligence friction is one of the few variables still yours.
There were 167 RIA transactions in the first half of 2026, up 13% over what had been the record half. Forty-six percent of consolidators name $1 billion to $5 billion firms as their preferred targets. And on valuations over the next six months, 82% of surveyed participants expect them flat, 18% expect declines, and none expect increases (DeVoe & Company RIA Deal Book, Q2 2026, reported July 27, 2026). Record volume, buyer appetite pointed at firms your size, and no expectation that the multiple moves in your favour while you wait. When the multiple is flat, the price is set by what diligence finds — and most of what diligence finds is not fixable in the quarter before a transaction. Client mix, adviser tenure and revenue concentration are what they are. The operational governance file is one of the few items on the list that is purely a function of whether somebody kept it up.
What the numbers actually say about a firm your size
Consolidators accounted for 50% of announced deals in the first half. RIAs themselves made 52 acquisitions — 31%, a record for adviser-led buying, which means some of your competitors are now on the other side of the table. Sellers in the $100 million to $500 million band fell from about half of all deals in 2023 to 32% in Q1 2026. The concentration has moved up into your band.
Meanwhile the economics of the seat that does this work moved too. Median operating profit margin across advisory firms is 27.8%; revenue per professional passed $1 million for the first time; and COO compensation rose 38% since 2018 while senior adviser and partner base pay was flat or declining (2025 InvestmentNews Advisor Benchmarking Study, published September 18, 2025 — n=77 firms, so treat it as directional rather than authoritative). Your most expensive non-revenue operator got more expensive, and a meaningful part of her week goes to assembling documents out of email, SharePoint and the CRM so somebody outside the firm can look at them.
Two claims we are not going to make
We are not telling you that governance work raises your valuation. There is no credible measurement of that and we are not going to invent one. Valuation is driven by growth, margin, client demographics, adviser retention and buyer appetite — not by the state of your vendor register.
We are not telling you what diligence friction costs. Anyone who quotes you a figure for that is making it up. What we will say is narrower and defensible: a diligence request you cannot answer becomes a diligence question, and a diligence question becomes either a delay or a term. You have sat on the other side of a transaction and you know how that works better than we can explain it.
The file a buyer asks for is very close to the file an examiner asks for
Different motive, near-identical list. The buyer wants to know what he is inheriting and whether it comes with an open exposure. The staff want to know whether your written policies were actually implemented. Your carrier wants a version of it at renewal. Build it once.
Here is the list. Take it to your COO and ask for straight answers — if they come back fast and specific, stop reading; if they come back as "we have a policy on that," you have found something.
- A dated inventory of every AI tool in use, including what individual advisers bought on a card. Notetakers run $60 to $80 per adviser per month, under every approval threshold you have.
- A register of every service provider with access to customer information, with the diligence record for each. Regulation S-P compliance was due December 3, 2025 at $1.5 billion or more in AUM and June 3, 2026 below it; both dates have passed and the extension ten trade associations sought on November 19, 2025 was not granted.
- For each of those providers, the 72-hour unauthorized-access notification arrangement. The rule requires written policies establishing oversight — not, contrary to what you may have been told, a written contract. The Commission declined to adopt that.
- The record of every incident in five years and the determination of whether notification was required, including the ones where you decided it was not.
- One completed test of an AI output against its source, in writing.
- The written statement of where a human reviews before anything reaches a client, with a name on it.
- The retention decision for AI meeting transcripts, dated before the transcripts.
- An incident response plan that contemplates an AI failure.
Across the industry, 37% of firms have an output testing policy, 48% have human-in-the-loop procedures and 14% have an incident response plan updated for AI (IAA / ACA Group / Yuter Compliance Consulting, 2026 Investment Management Compliance Testing Survey, 411 firms, July 29, 2026 — respondents skew larger and better-resourced than a firm your size, so read those as an upper bound).
Why this lands on one person, and why that is the risk
At your size the COO is frequently also the Chief Compliance Officer — 60% of CCOs hold multiple responsibilities and 45% of firms have between two and five compliance staff in total. She is not short of competence. She is short of hours, and hers are committed to the compliance calendar, the annual review, the billing run, and whatever became an operations problem last Thursday. Building an evidence file from nothing is a project, and projects lose to calendars every time.
What to do Monday
- Ask your COO the eight questions above. Ask for the artifact, not the policy.
- Count how many she can produce the same day.
- Find out when your cyber and E&O coverage renews. That is the deadline that already exists.
- Decide whether this gets built now, deliberately, or later, under a request list.
What we refuse
We build nothing that produces an investment recommendation, a suitability determination, a portfolio decision or a security selection. Ever — the exposure lands on you. We write no marketing copy, and we give no regulatory advice; we are not your compliance consultant and we will say so in front of yours. We are an MSP in Radnor that administers environments and builds the evidence layer inside them, where it actually lives.
Signet, a division of Circle Square Consulting. Radnor, Pennsylvania. — signetattest.com/evidence-file