July 2022

Buying financial planning businesses or accounting practices in regional areas is becoming a significant issue with many of our buyers. We have about 200 active buyers in Australia, many wanting sellers in the capital cities. They used to look at regional areas for acquisitions, but since the pandemic, it’s almost impossible to employ staff to replace the business owner.

Sellers in the country and regional areas generally want to collect the sale proceeds over a year, then move into retirement or some other career.

Qualified accountants and financial planners are impossible to find outside capital cities. Radar Results buyers are no longer prepared to risk not having support staff to run these businesses once the owner moves on.

Below in this newsletter are several positions our buyers want to fill, and with the lack of demand for regional practices, prices have fallen.

Radar Results has published a Price Guide for 15 years, and from July 2022, we will publish two Price Guides. One based on the age of the financial planning clients that are sold, and a new version based on the size of the client’s fee paid for the review service.

In capital cities and regional areas, the demand has lifted for clients who pay higher fees. The minimum fee payable to a financial planner is expected to be $4,000 to $6,000 per year. Similarly, accounting clients that pay higher fees are more valuable and sought after if they are small to medium-sized businesses.

The challenge is to find qualified accountants in these regional and country areas to take over from the owner.

Radar Results Price Guide to June 2022

BASED ON REVENUE TYPE AND AGE

Revenue Type and Age Recurring Revenue Multiple
Investment and super clients (aged 80 yrs+) 0.8x to 1.0x
Investment and super clients (aged 65 -79 yrs) 1.7x to 2.3x
Investment and super clients (aged up to 64 yrs) 2.2x to 2.8x
Risk clients (under 55 yrs) 2.2x to 2.7x
Risk clients (aged 55 – 60 yrs) 2.0x to 2.3x
Risk clients (aged 61 yrs+) 1.0x to 1.5x
Mortgage clients – home loan trails 2.25x to 3.25x

Previously 2.1x to 3.0x

Accounting fees – business clients 0.90 x to 1.25x
Accounting fees – individual returns 0.5x to 0.9x

BASED ON FEE SIZE PER CLIENT

Revenue Type Recurring Revenue Multiple
Investment and super clients

Average fee per client $2,000 to $4,000 per annum

Average fee per client $4,000 to $10,000 per annum

 

2.2x to 2.5x

2.6x to 3.3x

Risk insurance clients

Average fee per client $2,000 to $4,000 per annum

Average fee per client $4,000 to $10,000 per annum

 

2.2x to 2.5x

2.6x to 3.3x

Accounting fees – business clients

Average Fee per client $2,000 to $4,000 per annum

Average fee per client $4,000 to $10,000 per annum

 

1.10x to 1.20x

1.25x to 1.35x

Accounting fees – individual returns 0.5x to 0.9x

 

The multiples above can vary depending on the terms the vendor offers to the purchaser when selling, the location of the vendor’s clients, the client’s ages and the investment products recommended. The account balances of each client are essential with the fee-for-service charge—average fees per client between $4,000 to $6,000 per annum command the higher multiple.

Multiples paid for risk books or insurance-revenue-based practices will depend on the client’s occupation, age, premium size, policy type and the geographic location of the clients. The multiples displayed above are for high-quality risk clients with clients ages of between 35-55 years and where the policy owner is a small business owner or a professional based in a capital city.