The firms moving up through the tiers have one thing in common – and it is not budget.
It is leadership that treats AI as an organizational, rather than technological, question.
The recent Saltus / L.E.K. research, debated in Money Marketing earlier this year, anchored the AI conversation in advice on a single question: how many heads will AI cut? Whether AI cuts headcount is a tactical issue. The more strategic question that buyers are already asking is: What is AI doing to enterprise value?
Consolidators and PE acquirers are not asking which tools a firm uses. They are asking what kind of AI a firm has adopted and where it sits in the business or in the technology stack. That distinction tells them how durable the productivity gain is, how much of the firm depends on individual operators rather than the system, and how easy the firm will be to integrate post-deal. We built SOFI to solve a problem we kept running into in our own work: advisers were spending more time documenting client conversations than having them. Two years in, SOFI sits inside more than 500 firms across the UK advice and wealth ecosystem. Having watched its evolution and watched dozens of other tools get procured alongside it, the same pattern repeats. The firms getting meaningful productivity gains from AI are not doing it through better tools. They are operating at a different tier of AI altogether.
Three tiers, three different conversations with a buyer
AI in advice firms sits in one of three tiers, distinguished by what the technology is being asked to do. The tier a firm operates at determines, more than anything else, what its AI adoption is worth in a sale process.
Tier 1 – function replacement. AI used to do something faster than a human did before. Note-taking, fact-find generation, basic compliance admin. The result: more tactical productivity, low strategic uplift, operating model unchanged. Most firms calling themselves AI-enabled today sit here, and they are not wrong to. Tier 1 is genuinely useful. It is just not transformational.
Tier 2 – process redesign. Here, AI used to reshape how workflows through the firm. Not ‘AI does X faster’ but ‘the firm operates differently because AI is in the workflow.’ Templated client journeys, structured outputs feeding into review cycles, compliance built into the conversation rather than added on at the end. This is where firms genuinely separate, because the cost-to-serve drops, the principal’s time is free for higher-value work, and AI starts contributing to enterprise value rather than just operator productivity.
Tier 3 -enterprise transformation. At this tier, the firm itself is restructured around AI capability. The operating model changes. The client proposition can change. Headcount maths alters as a consequence rather than strategy. Few advice firms have done this yet, but the early signals are visible, including the first conversations about agentic operating models where parts of the firm run on autonomous AI workflows. Firms thinking like this are not asking what AI cuts. They are asking what the firm becomes. Very few advice firms are operating at Tier 3 today. The more immediate commercial divide will emerge between firms that remain at Tier 1 and those redesigning workflows at Tier 2.
Why most firms get stuck between Tier 1 and Tier 2
Industry data on this is uncomfortable. McKinsey’s 2025 research found that 92 per cent of executives plan to increase AI spending. IBM’s Institute for Business Value puts the average ROI on enterprise-wide AI initiatives at under 6 per cent. The gap between investment and value is widening, not closing.
This is not a tool problem. It is a leadership and organisational change problem. Three barriers keep firms at Tier 1:
- Leadership that treats AI as a procurement question rather than a strategy question, ending up with capable tools sitting on top of an unchanged operating model.
- Poor data quality, which limits what AI can credibly do when client data has been allowed to sit in unstructured form across systems that do not talk to each other.
- And the absence of strategic alignment between AI investment and what the firm wants to become, which turns productivity gains into operational slack rather than enterprise value.
Firms that move up the tiers reimagine processes first and procure technology second. Firms that stay stuck do the opposite, and the spending keeps going up.
Why this matters for valuation
A Tier 1 firm has bought tools. A Tier 2 firm has rebuilt how it works. A Tier 3 firm has rebuilt what it is. The valuation differential between those three positions is widening, and most owner-principals are still answering the question on the wrong tier.
The trap worth naming: Procuring Tier 1 tools and assuming the firm is therefore AI-ready. Our SOFI by Numbers 2025 work found 78 per cent of advisers using purpose-built AI in compliance workflows saving three or more hours a week, over 150 hours (about 13 days) per adviser per year. That is genuine productivity. But Tier 1 productivity sits at the operator level, not the firm level. Time saved that is not reinvested into capacity, capability or proposition is operational slack, and a sharp acquirer will not pay for it as enterprise value.
Leadership is the variable
It’s clear that firms moving up the tiers have one thing in common: Leadership that treats AI as and organisational question rather than a technology question. This comes from various places. AI literacy at board level. Diverse teams shaping how the technology gets deployed. A willingness to make operating model decisions without complete certainty about where the technology lands.
Technology is not the constraint. Imagination is. Visionary leadership will close the tier gap.
The exam question
The exam question for any owner-principal thinking about sales, succession or growth in the next three years is not how many heads AI will cut. It is which tier of AI maturity their firm operates at today, and which tier they need to be at when a buyer walks through the door.
The firms that benefit most from AI will not be those that buy the most tools. They will be the firms that redesign their operating model early enough for those gains to become embedded in enterprise value before the market starts pricing the difference in
Stuart Breyer is the CEO of mallowstreet and a friend of ours at The NexStage. Find out more about him and SOFI HERE