Radar Results Price Guide to June 2023

Radar Results Price Guide to June 2023

Revenue Type and Client’s Age
Investment and super clients (aged 80 yrs+) 0.8x to 1.0x
Investment and super clients (aged 65 -79 yrs) 1.9x – 2.5x
Previously 1.7x to 2.3x
Investment and super clients (aged up to 64 yrs) 2.3x to 3.0x
Previously 2.2x to 2.8x
Risk clients (under 55 yrs) 2.3 to 3.0
Previously 2.2x to 2.7x
Risk clients (aged 55 – 60 yrs) 2.1x – 2.5x
Previously 2.0x to 2.3x
Risk clients (aged 61 yrs+) 1.0x to 1.5x
Corporate super plans – commission switched off Negotiable
Mortgage clients – home loan trails 2.5x – 3.5x
Previously 2.25x to 3.25x
Accounting fees – business clients 0.95x – 1.30x
Previously 0.90x to 1.25x
Accounting fees – individual returns 0.5x to 0.9x
SMSF administration fees 1.5x – 2.0x

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; Funds Under Management or Administration, and the investment products recommended. The $ account balances of each client are essential with the fee-for-service charge — clients with higher $ account balances, paying higher fees, naturally command the higher multiples.
Multiples paid for risk books or insurance-revenue-based practices will depend on the client’s occupation, age, premium size, policy type, and geographic location of the clients.

BASED ON FEE SIZE PER CLIENT

Revenue Type Recurring Revenue Multiple
Investment and super clients

Fee per client of less than $2,000 per annum

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

Fee per client above $4,000 per annum

1.0x – 2.0x

2.2x to 2.5x

2.7x – 3.5x
Previously 2.6x – 3.3x

Risk insurance clients

Fee per client of less than $2,000 per annum

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

Fee per client above $4,000 per annum

1.0x – 2.2x

2.2x to 2.5x

2.6x to 3.5x
Previously 2.6x to 3.3x

Accounting fees – business clients

Fee per client up to $4,000 per annum

Fee per client above $4,000 per annum

1.1x to 1.2x

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— The most requested clients are those paying fees between $3,000 to $6,000 per annum with reasonably high $ account balances. These clients, therefore, 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 geographic location of the clients.

The tables above show the multiples based on two different methods of valuing a client base. Most client bases are now valued using a combination of both methods.

A market value can be determined depending on the type of AFSL and its authorisations. An AFSL can sell for a price based on what it’s allowed to do. Below is a summary of what a buyer may be expected to pay for an AFSL.

Type of AFSL Authorisations Market value
Vanilla or basic Financial advice retail, superannuation, risk insurance, negative gearing $20,000
Managed discretionary trust MDA Plus the above $40,000
Derivatives and Options plus the above Plus the above $80,000 to $100,000
Forex trading Plus the above $500,000 plus

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.

 

 

Radar Results Price Guide to December 2021

Price Guide March 2021

Radar’s Price Guide May 2020

September 2019 Price Guide

Radar Results Price Guide to September 2019: –

Revenue Type Recurring Revenue Multiple
Investment and super clients (aged 80 yrs+) 1.0x to 1.2x
Investment and super clients (aged 65 -79 yrs) 1.8x to 2.3x
Investment and super clients (aged up to 64 yrs) 2.3x to 2.8x
Risk clients (under 55 yrs) 2.3x to 2.8x
Risk clients (aged 55 – 60 yrs) 2.0x to 2.3x
Risk clients (aged 61 yrs+) 1.0x to 1.5x
Corporate super plans – commission switched off Negotiable
Grandfathered investment trail commissions Nil to 1.0x
Mortgage clients – home loan trails 1.8 to 2.2x
Accounting fees – business clients 0.75 x to 1.2x
Accounting fees – individual returns 0.5x to 0.9x

The multiples above can vary depending on the terms offered by the vendor, actual location of the clients, client ages and the investment products recommended. In relation to multiples paid for risk books or insurance-revenue based practices, the client’s occupation, age, premium size, policy type and the geographic location of the clients is critical. The multiples displayed above are for high-quality risk clients.

Price Guide – March 2019

Revenue Type Recurring Revenue Multiple
Investment and super clients (aged 80+ years) Fee for service 1.0x to 1.2x
Investment and super clients (aged 65 -79 years) Fee for service 1.8x to 2.5x
Investment and super clients (aged up to 64 years) Fee for service 2.5x to 2.8x
Risk clients (aged under 55 years) 2.5x to 3.0x
Risk clients (aged 55 – 60 years) 2.0x to 2.5x
Risk clients (aged 61+ years) 1.0x to 1.5x
Corporate super plans – commission switched off* Negotiable 
Corporate super plans – commission converted to a flat fee for each employee 1.5x to 2.0x
Grandfathered investment trail commissions 1.0x to 1.5x
Mortgage clients – home loan trails 1.7x to 2.0x
Accounting fees – business clients 0.75 x to 1.2x
Accounting fees – individual returns 0.5x to 0.9x

Radar’s Price Guide

 

An indication of prices as at August 2018

Revenue Type Recurring Revenue multiple
Investment and super clients (age 80 yrs+)  1.0x to 1.2x

(Down from 1.8x)

Investment and super clients (age 65-79 yrs) 1.8x to 2.5x
Investment and super clients (age up to 64 yrs) 2.5x to 3.0x
Risk clients (under 55 years) 2.5x to 3.0x

(Down from 3.5x)

Risk clients (over 55 years) 2.2x to 2.6x

(Down from 2.8x)

Super clients – commission switched off Neg*
Corporate super clients – flat fee per employee 1.5x to 2.0x
Cs and Ds – mix of both risk and investment 1.5x to 2.0x

(Down from 2.7x)

Mortgage clients – home loan trails 2.0x to 2.5x
Accounting fee – business clients 0.75x to 1.2x
Accounting fee – individual returns 0.5x to 0.9x

* No transactions

The above multiples can vary depending on the terms offered by the vendor, geographic location of the client, age of the client and the investment products within the client’s portfolio. Multiples paid for risk books or insurance revenue-based practices will vary depending on the client’s occupation, size of premium, type of policy (stepped or level) and geographic location of the client. The multiples displayed above are for high-quality risk clients. The table above is based on market activity over the past twelve months to August 2018.

Life insurance price multiples lower (Down 8%)

Radar Results has seen prices paid for risk insurance client registers reduce for two reasons. Firstly, the Life Insurance Remuneration Act effective from 1 January 2018 has reduced the amount of upfront commission paid on new life insurance policies, income protection policies and trauma policies down to 80% for this year and then down to 60% for 2019. Previously, insurance companies were paying up to 120% of the first year’s premium as a commission. Secondly, the responsibility period for the commission payment has been pushed out to two years after previously being just one year. The impact of The Royal Commission into the financial services sector and the higher education standards looming has influenced more businesses to come to market. With many more sellers now in the market, there’s a larger choice, and a decline in prices now offered. There is more risk insurance businesses on the market now than at any other time that I can recall.                                                                       

Investment & superannuation clients 80yrs+ (Down 30%)

The Royal Commission has again spooked the market with investment clients (pension) and superannuation clients 80 years old and above selling for far lower prices than earlier in the year. Some product providers of legacy products have been switching off the trail commission that had been paid to licensees and advisers for these clients. Recently the sale price of risk insurance register was reduced by over 13%, or nearly $100,000 as a result of legacy product commission being turned off. As explained by the product providers, this was done in the best interest of the clients. 

Grandfathered trail commission – C & D clients (Down 25%)

Radar Results has seen recent sale transactions trade between 1.5 times and 2 times the net trail commission. Previously, these had been selling for as high as 3 times, but more commonly at a high of 2.7 times. Once again, the Royal Commission has prompted some industry bodies to recommend that they be phased out or even cease immediately. These trail commission registers in 2013/14 were sought after because no Fee Disclosure Statement (FDS) was required and the opt-in requirement for new clients from 1 July 2013, didn’t apply. Even some major banks that used to lend on this asset class have done a back-flip and now don’t lend against these trail books.

 

Radar Results Price Guide

An indication of prices as at 1 March 2018

Revenue Type Recurring Revenue multiple
Investment and super clients (age 80 yrs+) 1.0x to 1.8x
Investment and super clients (age 65-79 yrs) 1.8x to 2.5x
Investment and super clients (age up to 64 yrs) 2.5x to 3.0x
Risk clients (under 55 years) 3.0x to 3.5x
Risk clients (over 55 years) 2.5x to 2.8x
Super clients – commission switched off Neg*
Corporate super clients – flat fee per employee 1.5x to 2.0x
Cs and Ds – mix of both risk and investment 2.0x to 2.7x
Mortgage clients – home loan trails 2.0x to 2.5x
Accounting fee – business clients 0.75x to 1.2x
Accounting fee – individual returns 0.5x to 0.9x

(Changes since March 2017 in red)

* No transactions

The above multiples can vary depending on the terms offered by the vendor, geographic location of the client, age of the client and the investment products within the client’s portfolio. Multiples paid for risk books or insurance revenue-based practices will vary depending on the client’s occupation, size of premium, type of policy (stepped or level) and geographic location of the client. The multiples displayed above are for high-quality risk clients. The table above is based on market activity over the past twelve months to 1 March 2018.

6 MONTHLY PRICE GUIDE

RADAR’S SIX MONTHLY PRICE GUIDE  

  An indication of prices as at 31 March 2017

(Changes since 31 October 2016 in red)

 

Revenue Type Recurring Revenue multiple
Investment and super clients (age 80 yrs+)  1.0x to 1.8x
Investment and super clients (age 65-79 yrs) 1.8x to 2.5x
Investment and super clients (age up to 64 yrs) 2.5x to 3.0x
Risk clients (under 55 years) 3.0x to 3.5x
Risk clients (over 55 years) 2.5x to 2.8x
Super clients – commission switched off Neg*
Corporate super clients – flat fee per employee      1.5x to 2.0x
Cs and Ds – mix of both risk and investment 2.0x to 2.5x
Mortgage clients 2.0x to 2.5x
Accounting fee – business clients 0.75x to 1.2x
Accounting fee – individual returns 0.5x to 0.9x

 

* No transactions

The above multiples can vary depending on the terms offered by the vendor, geographic location of the client, age of the client and the investment products within the client’s portfolio. Multiples paid for risk books or insurance revenue-based practices will vary depending on the client’s occupation, size of premium, type of policy (stepped or level) and geographic location of the client. The multiples displayed above are for high-quality risk clients. The table above is based on market activity over the past six months to 31 March 2017

 

THE MAIN CHANGES

 

OLDER FP INVESTMENT CLIENTS:

The main changes to the Radar Results Price Guide has been to the category titled, ‘Investment client’s 80-plus years of age’. We have seen client registers change hands at prices of up to 1.8 times the recurring revenue (RR), previously 1.5 times. Basically, demand for these clients has increased due to a shortage of registers for sale. Even now, the older client bases in the marketplace are looking attractive. Clients aged in their late 70’s have also seen higher demand, attracting prices between 1.8 to 2.5 times the RR.  Multiples of RR of up to 2.5 times are being paid for registers, where the average age of the client is close to 65 years.  

CORPORATE SUPER PLANS (FLAT FEE):

A sector where price multiples have fallen is the flat fee corporate superannuation area. In place of the former product provider commission payment system, some licensees are now paying advisers a flat fee per employee. This sector has seen minimal sales at lower multiples. As a result, the market multiple rate of 2.5 times RR has been moved down to a maximum of 2.0 times.

CORPORATE SUPER PLANS (NO COMMISSIONS):

There is now debate as to how much corporate super client registers are worth after the commissions have been turned off and there’s no arrangement in place with their licensee for a flat fee payment. Contrary to the MySuper principles contained in the FOFA legislation, there are instances in which commission payments will continue, where most of the employees have made an investment selection rather than just accepting the MySuper default option.

THE VALUE OF ACCRUED DEFAULT AMOUNT (ADA) CLIENTS:

Radar Results has been asked to place a value on ADA clients, where they have moved away from an employer’s sponsored super plan and left the balance under that employer’s plan. Some call these clients inactive, dormant or de-linked members of employer sponsored super plans. Their information may or may not be up-to-date, and can usually be accessed by the existing adviser by going to the product manager’s portal.

There are thoughts that ADA clients may be a liability if retained by the existing adviser, while others feel they are an asset and can be contacted and converted into quality FP clients.

ACCOUNTING FEES:

Prices being paid for lower end business accounting fees like BAS return work has fallen from 90 cents to 75 cents. At the higher end, management accounting fees, audit, trust and Self-Managed Super Fund (SMSF) administration fees have either stabilised or in some cases increased. Demand is such that price multiples could escalate to $1.50 in the $1.00 for quality accounting businesses primarily in the CBD and metropolitan regions. Radar Results has seen $1.80 in the $1.00 paid for SMSF compliance fees.

MORTGAGE BOOKS:

Demand for mortgage books will see the current price move further up in the next six to twelve months. Currently, the 2.0 to 2.5 times trail appears to be the market price, however, in instances in which there has been 100 per cent payment upfront, 2.7 to 2.8 times trail with no claw-back has occurred. I would not be surprised to see 3.0 times the trail become a common price paid by 2018/19.

RISK CLIENTS:

There is still a huge demand for risk clients, a demand which has not been dampened by the proposed new Life Insurance Legislation. Most demand has been for book sizes of $150,000 to $500,000 in annual renewal commissions. The age of the clients is important, and the younger the clients, the higher the price multiple. Whether the premiums have been written as stepped or level doesn’t appear to make a price difference.