Lack of adviser businesses up for sale

30 June 2021
| By Laura Dew |
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The adviser exodus is failing to translate into businesses up for sale as firms seek acquisition opportunities.

John McIlroy, executive director at Crystal Wealth Partners in Sydney, said the firm had been looking at acquisition opportunities but there were few available businesses out there.

This surprised him, he said, as there were many people who were choosing not to take, or had failed, the Financial Adviser Standards and Ethics Authority (FASEA) exams and may be unable to trade in 2022. According to FASEA, there were 1,727 advisers who had failed the exam once and not passed.

McIlroy said: “We are getting good organic growth coming from referrals but have been looking for merger and acquisition opportunities for compatible businesses. We were looking at some last year but they didn’t go ahead.

“With the exodus of advisers we are seeing, you would have expected there were businesses out there up for sale. Lots of people haven’t passed the exam yet and it is hard to figure out what they will do next year.

“These people who don’t want to meet the requirements, what do they think will happen, do they think the Government will change its mind?”

Looking at latest figures from the Financial Advisers Register (FAR), 112 advisers exited the market in the week ended 25 June. 

He said Crystal had managed to emerge from the pandemic in good shape by picking up new clients who were seeking advice in light of the record low interest rates. Earlier this week, Natixis IM said clients were more likely to need advice in the near future if they wished to keep achieving double-digit returns in a post-COVID environment.

“We are in a better position now than we were before COVID-19, investment returns were OK and we picked up new clients as interest rates dropped to 0.1%. People also had time to focus on their personal circumstances,” McIlroy said.

“We had to educate clients though on their likely returns depending on how much risk they were willing to take. If they aren’t willing to take risk, they are unlikely to get 10% returns. On the other hand, we’ve had some clients who were taking more risk than they needed.”

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