Weak supply boosting valuations: Prendeville
Financial planning practice valuations have returned to three times recurring revenue as weak supply fails to meet demand, according to Forte Asset Solutions director Steve Prendeville.
Older planners are deferring their retirement strategies due to their low superannuation balances, leading to a lack of businesses up for sale, he said.
"It's probably one of the tightest markets I've seen on the supply side. I'm receiving probably 15 buyer enquiries a week, and I cannot fulfil the demand. There are only a couple of new businesses coming on each month," Prendeville said.
Demand for planning businesses is strong - particularly for books of business worth around $200,000, he added.
But confidence among planners that revenue streams will be safe under the Future of Financial Advice reforms has led to fewer book sales, Prendeville said.
The industry in general is "becalmed" at the moment, with existing clients parked in cash, he added.
"We're still seeing very little new business being generated, as reflected in some of the platform net outflows," he said.
While valuations are at "three times or greater", highly profitable businesses can attract as much as 3.3 or 3.5 times recurring revenue, Prendeville said.
"However, large businesses must be profitable after debt servicing, and very few are taking into account synergy benefits - and that's why the demand is more on the smaller end than the bigger end," Prendeville said.
Recommended for you
The Financial Advice Association Australia has appealed to licensees to urgently update their FAR records as hundreds of advisers are set to depart by the end of the year.
Demand for robo-advice tools is rising, a report has shown, but this is occurring simultaneously with rising demand for professional face-to-face advice.
ASIC has released the results of the latest financial adviser exam, held in November 2025.
Winners have been announced for this year's ifa Excellence Awards, hosted by Money Management's sister brand ifa.
