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
ASIC has launched court proceeding against the responsible entity of three managed investment schemes with around 600 retail investors.
There is a gap in the market for Australian advisers to help individuals with succession planning as the country has been noted by Capital Group for being overly “hands off” around inheritances.
ASIC has cancelled the AFSL of an advice firm associated with Shield and First Guardian collapses, and permanently banned its responsible manager.
Having peaked at more than 40 per cent growth since the first M&A bid, Insignia Financial shares have returned to earth six months later as the company awaits a final decision from CC Capital.
