REGULATORY MECHANICS

Client consent when an RIA changes hands

The Investment Advisers Act treats an advisory contract as personal to the adviser. It cannot be assigned without the client’s consent — and a change of control of the advisory firm can itself constitute an assignment, even where no individual client relationship visibly changes.

What counts as an assignment

A direct transfer of the contract is the obvious case. Less obvious: a transfer of a controlling block of the firm’s equity. Whether a particular transaction triggers assignment treatment turns on the structure and on who ends up controlling the adviser.

Affirmative versus negative consent

Affirmative consent requires the client to actively agree. Negative consent — telling clients the change is happening and treating silence as agreement after a stated notice period — is available in narrower circumstances. Which is permissible depends on your registration status and the facts of the transaction, and it is one of the first questions a buyer’s counsel will ask.

Why buyers price this

Consent risk is retention risk with a legal edge. A buyer modeling your book is modeling how many clients say yes. Where the consent mechanism is uncertain, they discount — or they push more of the price into an earnout tied to the consent rate.

What to have ready

Your current client agreements, the assignment language inside them, your registration status, and a defensible view of which consent mechanism applies. Firms that can answer this in the first meeting look materially more prepared than firms that cannot.

Not legal advice. Consent mechanics turn on your specific facts and registration. Take this to securities counsel before you rely on it.

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