Succession Issues for Financial Planners
According to John Birt from Radar Results, the number of financial planners seeking advice on selling their business has increased dramatically since the Federal elections. He states that based on feedback, planners believe that Bill Shorten, Minister for Financial Services and Superannuation will be more forceful in getting the reform package through Parliament, which would see the banning of commissions and various other reforms that planners believed would impact on revenues.
Historically buyers of financial planning businesses were focused on revenues, but according to Tony Fenning, Shadforth Financial Group chief executive, he thinks the days of paying a number based on revenue should be over. The group is only interested in the underlying profit of the financial planning business, and a lot don’t have much profit.
While Shadforth was seeing plenty of opportunities for acquisition, they are not willing to to pay vendors what they are asking. Fenning notes that the effects of the regulatory regime are that those businesses are worth less today than they were a year ago, 5 years ago or even 10 years ago, and they’re getting worth less each day or month or year.
Financial planners that are looking to sell their business need to adopt the same principals as other business owners, and have a long term strategic plan that focuses on the profitability of the business. At Succession Plus, we believe the minimum time frame to maximise the wealth in a business is 5 years.
Craig West is a strategic accountant who has over 20 years’ experience advising business owners. His background as a CPA in public practice, provided invaluable experience in the key issues of concern to business owners and strategies to build, maximise, protect and extract wealth as a business owner.