The demographic with the highest multiple when selling up
Firms with investment and super clients in their sixties can attract the highest multiples when it comes to selling a financial planning business.
Information from Radar Results found that firms with investment and super clients aged up to 64 could attract recurring revenue multiples of 2.2x to 2.7x.
This was also the case for firms which had risk clients aged under 55.
For firms where clients were aged 65 to 79, the multiple fell to 1.7x to 2.2x.
Radar Results said: “The account balances of each client are essential in relation to the fee-for-service charge. Average fees per client of between $3,000 to $5,000 per annum command the higher multiple.
“Multiples paid for risk books or insurance-revenue based practices will depend on the client's occupation, age, premium size, policy type and geographic location of the clients. The multiples displayed are for high-quality risk clients with ages of between 35 to 50 years and where the policy owner is a small business owner or a professional based in a capital city.”
There were two areas where the multiples had changed from previous surveys, mortgage clients with home loan trails which increased from 1.8x-2.5x to 1.9-2.7x and for accounting fees with business clients which increased from 0.75x-1.2x to 0.9x-1.2x.
“Accounting practices are in short supply and with the high demand by our buyers, increased prices are being paid. It is the same for loan books. Mortgage brokers who wish to cash in on the trails they receive from their aggregator can now get close to 3x the annual trail,” Radar said.
“Trails are usually 0.15% of the home loan, and with house prices moving up over the past year and with interest rates exceptionally low, the size of the loans are much more significant.”
AUTHOR
Laura Dew
Recommended for you
A strong demand for core fixed income solutions has seen the Betashares Australian Composite Bond ETF surpass $1 billion in funds under management, driven by both advisers and investors.
As the end of the year approaches, two listed advice licensees have seen significant year-on-year improvement in their share price with only one firm reporting a loss since the start of 2025.
Having departed Magellan after more than 18 years, its former head of investment Gerald Stack has been appointed as chief executive of MFF Group.
With scalability becoming increasingly important for advice firms, a specialist consultant says organisational structure and strategic planning can be the biggest hurdles for those chasing growth.
