|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|
Risk insurance registers up and down
Radar Results has seen prices paid for risk insurance books move in both directions. Risk books can include life insurance, income protection and trauma insurance (sometime referred to as critical illness cover).
It appears that financial planners who own life books at the smaller end of the market, $100K to $200K of recurring revenue (RR), are looking to sell them now rather than wait for the findings and report from the Royal Commission. This is because the findings of the Royal Commission when released in Feb 2019, may shake up the market. Certainly, the higher education requirements are also scaring planners into making an early exit, not to mention the lower up-front commission system and the new two-year claw-back period for commissions. Radar Results has seen prices paid for smaller risk books move been 2 times and 3 times the annual recurring revenue (RR).
At the other end of the market, large risk insurance businesses of say $1M to $3M in annual RR can command far higher multiples. Last year banks’ lending to this larger sector of the market, funded clients to buy these high-end risk books at an average of more than 3.5x the RR.
Some banks have said that they can’t lend enough money to financial planners for acquisitions, but unfortunately, they have also increased the minimum loan that they will approve to $1M.
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Radar Results is the industry leader to sell, buy or merge your financial planning, accounting practice, insurance business or mortgage broking business.
Phone: 02 4384 5670
Fax: 02 4744 2440
PO Box 311
Avoca Beach NSW 2251
Mobile: 0413 838 362
Licence No: 20054274