Protect Your RIA’s Intellectual Property for a Higher Multiple • Financially Simple

Driving your Registered Investment Adviser (RIA) firm toward the eight-figure exit can be grueling. It’s a lengthy process with many moving parts. As you work to improve one area of your business, you will create new challenges in others. Fortunately, there’s a secret weapon at your disposal. Your firm’s intellectual property (IP) and trade secrets could be leveraged to boost your multiplier and help you reach the eight-figure exit you desire. Therefore, you must protect your RIA’s intellectual property at all costs. Join me as I explore the ins and outs of protecting your IP.

Follow Along With The Financially Simple Podcast!

This week on The Financially Simple Podcast: 

  • (13:44) Businesses Often Invest In IP

  • (16:01) The “Secret Sauce”

  • (19:38) How Do You Protect Your IP?

The Basics of Intellectual Property

In his book, The Wealth of Knowledge, Thomas A. Stewart defines intellectual capital as “Knowledge assets.” He expands on this idea, saying, “Simply put, knowledge assets are talent, skills, know-how, know-what, and relationships – and machines and networks that embody them – that can be used to create wealth.” Similarly, my dear friend and colleague, Chris Snider, defines IP as “Structural Capital.” Illustrating its importance, Snider goes on to state that, “Structural capital is a business’s infrastructure.”

You see, your RIA firm’s intellectual property can be a potent tool in your exit strategy. When safeguarded as part of a comprehensive IP risk management plan, your IP can potentially enhance your firm’s valuation, pushing it past the eight-figure threshold. However, without the proper legal protections, your IP can quickly turn from an asset into a liability. In fact, according to an update to the IP Commission Report, IP theft costs could be staggering, estimated between $225 billion and possibly as high as $600 billion.

Friends, this is a major threat that highlights the need to protect your RIA’s intellectual property. However, before getting into the significance of IP protection, let’s clarify what intellectual property is. Put simply, intellectual property is “a broad categorical description for the set of intangible assets owned and legally protected by a company or individual from outside use or implementation without consent.” IP encompasses several basic categories.


You know, I love watching television show, Shark Tank. Every week, the panel hears from several upstarts seeking to leverage their ideas into “the  next big thing.” Oftentimes, as these entrepreneurs are making their pitches, they’ll say things like, “I’ve got a patent pending.” When this happens, you can see that the sharks generally let this statement roll off their backs. However, if the business owner says, “I’ve got a patent,” they all start to sit up and pay attention. This is because they understand that protecting IP can improve the value of a company.

A patent grants the inventor exclusive rights to their invention. This could be a design, process, improvement, or even a physical creation. Patent rights are granted by a government agency, such as the U.S. Patent and Trademark Office. Patents are used for innovations in technology and software. One well-known example of this is Steve Jobs, Jerrold Mannock, Dean Hovey, and David Kelley’s patent for the first personal computer in 1980.

So, how do patents apply to the RIA owner? Let’s say you’ve created a best-in-class process for proactive client engagement that increases their stickability. You could patent that process, enabling you to leverage it as intellectual property.


Copyrights provide authors and creators of original content the exclusive right to use, copy, or duplicate their work. However, the original creator can grant authorization to others through licensing agreements. Folks, this is a must for RIA owners! With all the infographics, white papers, etc., that are distributed across the industry each day, securing copyrights for your original content could make it a valuable asset.


Trademarks encompass symbols, phrases, or insignias that represent a product, legally distinguishing it from others in the market. A company exclusively owns its trademarks. This prevents others from using or copying them and enables you to create a brand. An iconic example is the Coca-Cola Company trademarking its contour bottle in 2002. However, applying trademarks to the RIA industry can be as simple as naming rights.

One example of this can be found in a lawsuit filed in 2022. ThinkAdvisor reports that a Michigan-based RIA is suing for trademark infringement. The lawsuit stems from the use of the Altruist name and alleges that the defendant used the name without permission.

Trade Secrets

Trade secrets are essential in the RIA space. They encompass confidential company processes or practices that offer an economic advantage. Business owners must take a proactive stance on protecting their trade secrets. Years ago, I worked with a realtor in the Charleston, South Carolina area. This individual was generating commissions that were four to five times greater than anyone else in the region. You see, they built a proprietary system to market the houses for a greater close rate.

In my own businesses, I built proprietary processes and developed trade secrets to greatly magnify my time. I can’t tell you how many times I’ve had people come up to me, asking, “Justin, how do you do it? You must be in front of a microphone all the time!” But the truth is, because of our trade secrets, I’m able to publish weekly blogs and podcast episodes with very little effort or time commitment on my part.

Friends, you don’t have to do what I did. You don’t need to start a blog or a podcast. But perhaps you’ve developed a system or a process that has enabled you to record revenues at levels considered best-in-class. Maybe you have a proprietary client onboarding process that improves retention rates. Whatever they may be, your firm’s trade secrets give you a competitive edge and are often critical to your success. This is why you should require prospective buyers and team members to sign a non-disclosure agreement (NDA) before revealing such information.

Your Intellectual Property is a Valuable Asset

In the context of an eight-figure exit, safeguarding your IP with measures like patents, copyrights, trademarks, and NDAs can elevate your firm’s valuation. Goldstein Patent Law states that Intellectual property assets can significantly increase the overall value of a company. These assets, such as patents, trademarks, and copyrights, bring added value by protecting unique ideas and innovations.

Similarly, Julian Crump, President of the International Federation of Intellectual Property Attorneys (FICPI), emphasizes that IP is not just about safeguarding products or services; it is a valuable asset in its own right. Protecting your IP creates a protective wrapper around an intangible asset, locking in value and enabling it to be traded through licensing, pooling, securitization, or acquisition.

Richard Thoman, former CEO of Xerox, truly believed in the value of IP and its ability to transform a company. “I’m convinced that the management of intellectual property is how value added is going to be created at Xerox. Increasingly, companies that are good at managing IP will win, while those that aren’t will lose.” Thoman had already experienced this while serving as the CFO at IBM which witnessed a 3,300% boost in annual patent-licensing royalties between 1990 and 2000.

All of this underpins the necessity to develop IP. However, it also reveals that safeguarding your RIA’s IP can contribute to an even higher valuation during acquisitions. You see, businesses often invest in IP. It’s often more economical for a company to buy a competitor’s intellectual property rather than attempting to create it themselves. Therefore, when you protect your IP, prospective buyers are incentivized to make more attractive offers. So, what can you do to protect your RIA’s intellectual property?

How to Protect Your RIA’s Intellectual Property

Friends, if the ultimate goal is to achieve the eight-figure exit so you can live out your days sipping umbrella drinks in the shade of a palm tree, you must protect the value of your firm. Having the right protections in place can make your RIA more attractive to prospective buyers while increasing its value multiplier. With that in mind, let’s look at some methods for protecting intellectual property.

Patents, Trademarks, and Copyrights

Now, I know I already touched on these, but I want to emphasize their importance. You can utilize these legal tools within your RIA to establish your exclusive rights over your innovative ideas, brand identity, and original content. These protections not only prevent others from using your IP without permission but also add substantial value to your business in the eyes of potential acquirers.

Non-Disclosure Agreements (NDAs)

Do you have a “secret formula’ or “special sauce” for executing the operational and client-facing aspects of your firm? Is there something that truly sets you apart from your competition? Friends, if this is the case, you can’t let the proverbial cat out of the bag. NDAs are essential for safeguarding your trade secrets and confidential information. They legally bind employees, contractors, partners, and even prospective buyers to maintain strict confidentiality, ensuring your proprietary knowledge remains protected. But don’t stop there! There are additional means of protecting your firm’s IP.

IP Infringement Coverage

Intellectual property infringement coverage, also known as intellectual property liability coverage, defends against patent infringement claims and safeguards your ownership rights in the IP. It also provides insurance to indemnify customers and distributors against allegations of IP rights violations and indemnifies for damages resulting from legal liability.

IP Enforcement Coverage

Consider this…the cost of an average patent case, where $1 million to $25 million is at stake, is $1.6 million through the completion of discovery and $2.8 million through final disposition, according to the American Intellectual Property Law Association. Fortunately, insurers provide a fund to cover your legal expenses while pursuing infringers to enforce or protect your IP rights. This financial resource covers fees and expenses incurred during these pursuits. If you don’t already have this protection, speak with your insurance agent today!

IP Representations and Warranties

Finally, we have IP representations and warranties coverage. Primarily associated with mergers and acquisitions (M&A) or purchase agreements, IP representations and warranties certify the validity of the IP involved in the transaction. This is much like title insurance in real estate purchases. This coverage defends against infringement or misappropriation liability and provides reimbursement for your defense expenses and losses.

Wrapping Up…

Look, friends, to ensure proper IP protection, it’s crucial to consult with IP professionals and legal experts who can navigate the complexities of safeguarding your intellectual property. The truth is, we don’t know what we don’t know. This is why I’m such a big proponent of seeking out expert advice. None of us are experts in all things. We just don’t have the bandwidth to know all things about everything.

I hope this has inspired you to take a closer look at your firm’s intellectual property, and its role in your eight-figure exit. As you examine your firm’s IP, look for any weak spots or vulnerabilities. By completely protecting your IP (at least, as much as possible), you could drive your multiple higher, making it possible to achieve the exit of your dreams.

Look, I know life is hard. But life is good. Developing and protecting your RIA’s intellectual property can be frustrating, but it doesn’t have to be. By reviewing your IP with an expert, you can make protecting your firm’s IP at least financially simple. Hey, let’s go out and make it a great day!

Is your intellectual property positioned to drive your firm toward the eight-figure exit? Do you have strategies in place to develop new IPs while protecting the old? Reach out to our team to learn how we could help you work toward your goals!

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