Incoming financial planners can retain every client
With appropriate transition arrangements in place, the purchase of a financial planning practice should see 98 per cent of the client base retained, says Kenyon Partners director Alan Kenyon.
Most of the succession deals Kenyon oversaw in the last month involved an upfront payment of 70 per cent to the retiring adviser, with the remaining 30 per cent tied to revenue or client numbers.
"We've just done one [transaction] with 65 per cent upfront … They've just paid a bit less upfront to make sure that in the six months they've got the retiring adviser that the transition's done," said Kenyon.
A typical arrangement might see the high-net-wealth clients transitioned in the first six months, followed by the outgoing planner doing some marketing "a few days a week", said Kenyon.
"The [retiring planner] can say to clients: 'I'm not going to be responsible for your day-to-day stuff, but we can still play golf'," he said.
But not every deal Kenyon is involved in ends as happily.
"Where you don't have a proper transition - like in a couple of forced sales we've done for the banks - you hope to get at best 60-70 per cent of the clients, but in reality it might be 50 per cent," Kenyon said.
As for the state of the market, demand for planning practices continues to outpace supply - particularly in capital city CBDs where a new practice up for sale will attract 15 enquiries, Kenyon said.
"For regional areas [the demand] is slightly less. And if a business has to stay in a dealer group - say a Genesys business staying in Genesys - it's probably less than that," he said.
On the regulatory side, Kenyon welcomed the increased certainty about the grandfathering of commissions contained in the recent draft legislation as "a step in the right direction".
"We've quarantined some of the transactions we've done if there was perceived to be a high risk of FOFA implications," he said.
The surety about grandfathering has done a lot to ease some of those concerns, although the way the final legislation will be interpreted is still "a bit cloudy", he added.
Recommended for you
While crypto continues to gain traction among investors globally, improving accessibility for financial advisers is key to helping them serve the demand from younger clients, but there are some barriers still hindering adoption.
Investment platform Praemium has reported strong 2024–25 financial year results, with large increases across a range of business metrics, which it credits to the firm’s strategy and high-net-worth focus.
Alternative investment manager Regal Partners has set a target of doubling its offshore funds under management within three years amid strong inflows from offshore investors in the first half of 2025.
Fitzpatricks Advice Partners has formed a strategic alliance with two chapters of a global business support and networking organisation, expanding its offering for the firm’s advisers.
