Reality check on value of advice practice
Financial planners will need to be more realistic about the value of their businesses in the post-Royal Commission, post-Financial Adviser and Standards Authority (FASEA) world.
That was the assessment of three senior dealer group executives who told Money Management’s Future of Wealth Management conference in Sydney that multiples of as high as 2.5 times revenue were now just unrealistic in the context of today’s industry.
Count Plus chief executive, Matthew Rowe said that it was common for small accounting practices to be valued at between 80 cents and a $1.10 and he believed that advice practices would need to adjust to a similar reality.
Centrepoint Alliance chief executive, Angus Benbow agreed with Rowe that changes to the industry, not least around grandfathered commissions, had had a fundamental impact on valuations.
However, Rowe acknowledged that notwithstanding the realities confronting advice practices, he still regarded them as being between 5-7% more profitable than accounting businesses.
“The days of trading on revenue are gone,” he said.
Recommended for you
Compared to four years ago when the divide between boutique and large licensees were largely equal, adviser movements have seen this trend shift in light of new licensees commencing.
As ongoing market uncertainty sees advisers look beyond traditional equity exposure, Fidante has found adviser interest in small caps and emerging markets for portfolio returns has almost doubled since April.
CoreData has shared the top areas of demand for cryptocurrency advice but finds investors are seeking advisers who actively invest in the asset themselves.
With regulators ‘raising the bar’ on retirement planning, Lonsec Research and Ratings has urged advisers to place greater focus on sequencing and longevity risk as they navigate clients through the shifting landscape.
