For financial advisors and wealth managers
A practice built on recurring revenue and client relationships creates unique prenup considerations
AUM-based income, practice valuation multiples, non-solicitation restrictions, and the personal goodwill question. Two independent attorneys who understand how advisory practices work, for one flat fee.
$5,000 flat fee per couple. No payment to start.
The valuation question
Why advisory practices are difficult to value in a divorce
A financial advisory practice is not a widget factory. Its value is overwhelmingly tied to relationships. The question of whether that value belongs to you personally or to the enterprise is one of the most contested issues in professional practice divorces.
Personal goodwill vs enterprise goodwill. If clients follow you because of your personal reputation, the value may be characterized as personal goodwill. If they stay because of the firm's brand, infrastructure, and team, it may be enterprise goodwill. Most practices contain some of both. How a court might apportion these depends heavily on the state.
Recurring revenue changes the math. With over 70% of advisory revenue now AUM-based, your income regenerates each quarter without acquiring new clients. This recurring nature can push valuation multiples higher because the revenue is more predictable, but it also raises questions about whether the value was built before or during the marriage.
Client concentration risk. If your largest 10 households represent 40% of revenue, the practice is simultaneously more valuable (high revenue per client) and more fragile (key-person dependent). Valuation models may apply a discount or premium depending on concentration. A prenup can acknowledge this nuance.
EBITDA multiple range
4x to 15x
Varies by AUM, client demographics, and growth rate
Revenue multiple range
1.5x to 3x
Trailing twelve months, recurring revenue weighted
Typical EBITDA margins
25% to 40%
Mid-size fee-only RIAs with established books
Three intersecting agreements
Your prenup does not exist in isolation
Financial advisors often have multiple legal agreements governing their practice interest. These agreements interact, and a prenup should be drafted with awareness of the others.
Personal prenup
Addresses how your practice ownership, book of business, and advisory income are characterized during and after the marriage. Your attorney can help frame the distinction between personal effort and enterprise value.
Coordination point
Sets the baseline for how your individual interest in the firm is treated.
Firm buy-sell agreement
Governs what happens to your ownership if you leave, become disabled, or pass away. Typically sets a valuation formula (often revenue-based or AUM-based) and restricts transfers.
Coordination point
A prenup should be aware of any transfer restrictions or valuation caps your buy-sell imposes.
Non-compete and non-solicit
Restricts your ability to take clients if you depart the firm. May limit solicitation for 1 to 2 years within a geographic area or client segment.
Coordination point
These restrictions can affect practice valuation in a divorce context because they limit what you could rebuild independently.
Income characterization
Advisory compensation has many components
Not all advisor income is the same. Different compensation types may be treated differently in a prenup depending on their nature and timing.
AUM-based management fees
Nature: Recurring
Typically 0.5% to 1.5% of assets. Represents roughly 72% of advisor revenue industry-wide.
Financial planning fees
Nature: Recurring or project
Flat annual retainers or one-time plan fees. Growing as a share of total revenue.
Insurance and annuity commissions
Nature: One-time with trails
Initial commission at sale plus renewal trails over time. Characterization may depend on when the sale occurred.
Profit distributions
Nature: Periodic
If you are a partner or owner, distributions reflect firm profitability. Distinct from your salary or fee splits.
Succession or transition payments
Nature: Event-driven
Payments received when selling your book internally or externally. May arrive over several years.
What your prenup can address
Key topics for advisory practice owners
Practice classification
How your ownership interest is categorized based on when you built or acquired it.
Revenue during marriage
Distinguishing income from personal effort versus returns on pre-marital practice value.
Client book valuation
Addressing how recurring relationships are valued if the practice needs to be appraised.
Departure restrictions
How non-competes and non-solicits affect the practical value of your interest.
Succession plan impact
Coordinating your prenup with internal buyout timelines or external sale planning.
How it works
Three steps, two attorneys, one flat fee
Walk through your practice
Neptune’s guided intake covers your ownership structure, compensation components, client book size, and any existing firm agreements. Both partners complete the process.
Each partner gets their own attorney
Two separate, independent attorneys review your situation. They understand advisory practice structures and can explain how personal goodwill, AUM revenue, and firm agreements intersect.
Receive a tailored prenuptial agreement
Your drafting attorney creates an agreement that coordinates with your existing firm agreements and addresses the unique aspects of advisory practice ownership. Typically around 3 to 4 weeks when both partners use Neptune attorneys.
Transparent pricing
$5,000
per couple, flat fee
$3,000 drafting attorney + $2,000 reviewing attorney. No payment to get started. Rush pricing applies when the wedding is within 45 days.
Questions from financial advisors
How is my financial advisory practice valued in a prenup?
Practice valuation methods vary, but common approaches include multiples of revenue, multiples of EBITDA, or discounted cash flow analysis. The specific multiple depends on factors like AUM concentration, client demographics, growth trajectory, and whether the practice has transferable (enterprise) value versus value tied to your personal relationships. Your attorney can help you think through how your practice might be appraised and what assumptions a prenup should address.
What about personal goodwill vs enterprise goodwill?
This distinction can be significant. Personal goodwill reflects value tied to your individual reputation, relationships, and expertise. Enterprise goodwill reflects value in systems, staff, brand, and processes that would survive your departure. Many advisory practices contain both. Courts in different states treat this distinction differently. Your attorney can review how your state approaches the question and help you address it in the prenup.
How does my non-compete or non-solicit affect things?
Non-solicitation clauses (typically 1 to 2 years) can affect how your practice is valued because they limit your ability to take clients if you leave the firm. In a divorce context, this may reduce the practical value of your interest since you could not immediately replicate the book elsewhere. A prenup can acknowledge these restrictions and their implications for valuation.
Can a prenup coordinate with my firm’s buy-sell agreement?
Yes, and coordination is often important. Your buy-sell agreement may set a valuation formula, restrict share transfers, or require firm consent for ownership changes. A prenup can be drafted with awareness of these constraints so the two agreements do not conflict. Your attorney can review both documents together.
What does it cost and how long does it take?
Neptune charges a flat fee of $5,000 per couple, which covers two independent attorneys (one for each partner). No payment is required to start. Turnaround is typically around 3 to 4 weeks when both partners use Neptune attorneys. Rush pricing applies when the wedding is within 45 days.