Valuation

Is a valuation necessary to sell?

/in /by

Whether you need a formal valuation to sell your financial planning business depends on several factors, including the complexity of your business, the size of your practice, the buyer’s needs, and your confidence in understanding the value of what you’ve built. Here’s a breakdown of why you might or might not need one:

Why You Might Need a Valuation

Accurate Pricing: A professional valuation can help you establish a clear, data-backed asking price. Financial planning businesses are often valued based on funds under management (FUM), revenue, client retention, and profitability. A valuation ensures you have a solid, unbiased estimate of what your business is worth.

Complex Businesses: If your business has multiple revenue streams, numerous employees, or a diverse client base, a valuation can help simplify the process for you and potential buyers. It can factor in future growth projections and provide a comprehensive view of the business’s financial health.

Negotiation Leverage: Having a formal valuation gives you credibility during negotiations. It shows buyers that your asking price is based on an objective assessment, not just your attachment to the business.

Buyer Confidence: Buyers—especially if they are new to the industry or part of a more prominent firm—may want to see a formal valuation before they feel comfortable making an offer. It gives them a clearer understanding of what they’re getting and helps ensure they pay a fair price.

Why You Might Not Need a Valuation

Smaller or Simple Practices: If your business is straightforward—perhaps just you, a small team, and a manageable client base—you might not need a total valuation. Many buyers in the financial planning industry are experienced enough to evaluate the business based on assets under management, client retention rates, and annual revenue.

Strong Buyer Relationships: If you have a buyer already familiar with your business, they may not require a formal valuation. Instead, you can negotiate based on your knowledge of your client relationships, revenue streams, and growth potential.

Industry Standards: Sometimes, you can price your business based on industry multiples. For example, financial planning businesses are often valued at a multiple of revenue, which gives you a rough idea of what your business might be worth without needing a formal valuation.

Transparency and Clean Financials: If you have transparent, detailed financials and a stable revenue history, you may not need a formal valuation to justify your asking price. Transparent financial records and a thorough explanation of your client base and growth potential can sometimes be enough to satisfy buyers.

In Summary

  • A valuation is helpful for more complex businesses or to provide confidence to buyers and clarity during negotiations.
  • It may not be necessary if your business is smaller, more straightforward, or confident in pricing it based on industry standards and your knowledge of the business.

Ultimately, the decision depends on your business structure, your confidence in the selling process, and the buyer’s expectations.

Property Investment

Buying Property off-the-plan

Buying property off-the-plan can be risky, particularly in today’s uncertain economic climate. In recent years, many financial planners have been cautious about recommending direct property purchases to their clients, especially off-the-plan developments. Here’s why:

Lack of Professional Indemnity (PI) Insurance Coverage

One of the main concerns is that many licensees do not allow their authorised representatives to recommend direct property investments. Professional indemnity (PI) insurance, which protects the licensee and financial planner from client lawsuits over financial loss, often does not cover direct property recommendations.

Volatility in the Property Market

While property prices have risen over the past two years, history has shown that the market is prone to fluctuations. Any downturn can lead to substantial losses for investors, particularly those who have invested in off-the-plan properties.

Challenges in the Construction Industry

Since the COVID-19 pandemic, hundreds of property developers and builders have become liquidated, and the construction industry has faced ongoing challenges. Shortages in tradespeople and building materials, along with skyrocketing costs, have led to massive delays in property completion. Building costs have increased by over 40%, affecting developers’ profit margins and sometimes leading to project failures. For off-the-plan buyers, this has meant that deposits are often tied up for years without any guarantee of property completion.

Off-the-Plan Purchases: A Unique Risk

While this can seem attractive in a booming market, it becomes incredibly risky during uncertain times. Buyers can wait years for their property to be completed without control over delays or cancellations. In the worst-case scenario, the buyer could lose their deposit entirely if a developer goes into liquidation.

In the current environment of construction delays, rising costs, and developer liquidations, off-the-plan purchases are especially risky.

Interest Rate Risk

Another layer of risk is the rising interest rate environment. As inflation continues to be a concern, central banks may raise interest rates again, which could increase borrowing costs for property investors. This makes off-the-plan purchases even more dangerous, as buyers could be unable to finance the property when it is finally completed or stuck with higher-than-expected mortgage payments.

Conclusion

In this climate, financial planners and investors are better served by a conservative approach, prioritising transparency and careful risk management over potentially risky property ventures.

 

AFSL

Selling an Australian Financial Services License

Australian Financial Services Licenses (AFSLs) are valuable assets, and there is increasing demand for them in the market. Financial planners looking to exit the industry can sell their AFSL once their financial planning clients have been transferred to another licensee. Selling an AFSL is relatively straightforward but requires proper legal advice.

Key Points to Consider When Selling an AFSL

Client Transfers: Before selling an AFSL, transferring your financial planning clients to another licensee is essential. This step ensures the AFSL is dormant and ready for sale without any active business responsibilities attached.

Professional Indemnity Insurance: After the sale, professional indemnity (PI) insurance can be managed in two ways:

·    The existing policy can remain in place, or

·    The buyer can set up a new PI insurance policy once they take over the AFSL.

Sale Process:

·    The buyer acquires the company that holds the AFSL, not just the license itself.

·    The process generally takes 3 to 4 weeks, during which specialist lawyers handle the transfer of the company and its assets.

·    Radar Results uses lawyers with expertise in AFSL transfers, ensuring the process is smooth and efficient.

Changes in Directors and Shareholders: As part of the sale, the company’s directors and shareholders are replaced with the buyer’s. The Responsible Manager (RM), crucial for maintaining the AFSL’s compliance obligations, often remains in place unless the buyer has their own RM ready to step in. In some cases, ASIC prefers having two RMs on an AFSL to ensure greater security and oversight.

AFSL Market Value: The value of an AFSL depends on its authorisations and capabilities. Over the past year, demand for AFSLs has risen significantly, increasing prices. A basic or “vanilla” AFSL, which typically has limited authorisations, has seen its price increase from $20,000 to $40,000 due to the heightened demand.

Why Sell an AFSL?

With the high demand for licenses in the financial planning and advisory industry, selling an AFSL can provide an exit strategy for retiring financial planners. For buyers, acquiring an existing AFSL can save time and resources compared to applying for a new one with ASIC, which can be lengthy.

Position Vacant

Senior Accountant and Group Operations Manager – Narellan and Camden area of Southern Sydney.

A large client of Radar Results is looking to purchase an accounting practice with staff. However, the owner is retiring and needs to transition their role over time. The practice receives over $800,000 in accounting fees per annum, and an excellent salary is available for the successful applicant. Details are below on what is required, and in the first instance, please contact the Radar Results NSW Manager, Brett O’Malley, at brett@radarresults.com.au or 0414 721 900.

Position title – Accountant

Position type – Full-Time

Location – Narellan & Camden, NSW

Supervisor/Manager – Senior Accountant and Group Operations Manager

Main duties/responsibilities

Preparation of monthly and quarterly Business Activity statements for clients

Reconciliation of bank accounts and quarterly/annual accounts

Data entry of bank statements, invoices, receipts and other source documents

Preparation of quarterly/annual accounts and required workpapers

Review client data and correct it if necessary

Preparation of Individual, Partnership, Trust and Company Tax returns

Experience and skills

Minimum 3 years experience in client-facing Accounting services provision

Experience with Accounting software such as Xero, XPM and MYOB (highly desirable)

Free Appraisals – What’s your business worth in the market place?

What is it worth?

In addition to its comprehensive range of services, Radar Results offers a valuable Free Appraisal service tailored to practices considering selling. This service has been a cornerstone of Radar’s offerings, providing invaluable assistance to numerous individuals, including partners seeking buyouts, and genuine sellers, since 2006.

With a track record of preparing over 1000 appraisals, Radar Results has a reputation for delivering accurate and highly appreciated assessments. These written opinions serve as crucial tools for practitioners looking to gauge the value of their businesses in the market.

When conducting an appraisal, Radar Factors in various key metrics to provide a comprehensive evaluation:

1. Financial Performance: This includes factors such as total revenue, recurring revenue, and EBIT (Earnings Before Interest and Taxes), offering insights into the practice’s profitability and sustainability.

2. Business Characteristics: Radar considers elements such as the business’s location, the age demographic of its client base, the types of platforms utilised, fee structures, and the ratio of clients to Funds Under Management (FUM). These factors provide a nuanced understanding of the practice’s operational dynamics and market positioning.

3. Risk Assessment: For “risk-only” type businesses, additional measurements are employed to assess the level of risk inherent in the operation. This meticulous approach ensures that all aspects of the business are thoroughly evaluated, enabling a more accurate appraisal.

By meticulously analysing these parameters, Radar Results delivers comprehensive appraisals that offer practitioners valuable insights into the market value of their businesses. This enables informed decision-making regarding potential sales, partnerships, or other strategic initiatives.

Overall, the Free Appraisal service Radar Results provides is a testament to their commitment to supporting practitioners throughout the selling process, empowering them with the knowledge needed to navigate this significant transition with confidence.

Enquire About a Free Appraisal

 

No Fees or Commissions
Are you selling your business or client register? Radar Results as buyers agents can connect you with motivated buyers. No contract signed, no payment of commission or fee. Radar Results will prepare a free Business Profile which you can present to prospective buyers. Radar Results will also provide you with documentation and advice to help you through the sale process.
Free Sellers Kit – Order a copy
The free ‘Sellers Kit’ can save you a lot of time and money. The kit will provide a list of professionals researched by Radar Results and have been deemed to be experts in their respective fields. In addition to a Sellers Check List, the kit contains plenty of information specially designed for financial planners wanting to ensure they have covered all bases prior to selling.

John Birt

John Birt – CEO
Radar Results – Buyers Agents

what is your business worth?

Do you know what your business is worth?

/in /by

The June 2024 Price Guide is similar to June 2023, but the multiple for the Investment and super clients (age 80 years+) have increased by 10% to 0.9 times to 1.1 times the annual recurring revenue (previously 0.8x to 1.0x).

Radar Results transactions for the last 12 months show evidence that financial advisers with clients in the oldest age category have received higher prices over the previous 12 months. This may be due to the supply and demand curve, with fewer practices selling or coming to market. The Covid pandemic and changes in regulations (2020-2022) saw a substantial exodus of financial advisers from the industry. Many advisers chose to sell their client lists and associated revenues or their entire practices. This trend wasn’t limited to financial planning but was also evident in accounting and mortgage broking businesses.

However, as the pandemic subsided, the business environment began to stabilise. Transaction activities have since returned to more typical patterns, though the legacy of the pandemic’s impact on supply remains.

Radar Results’ Price Guide has two components: one based on age and one based on the size of the fee paid annually for the ongoing reviews and advice. Buyers and sellers should blend both charts when using the Price Guide to value a business or client register to determine a more accurate calculation.

The fee multiple for the self-managed superannuation fund (SMSF) section has also changed, moving to 1.25 times to 1.75 times the annual administration fee to manage the SMSF. This may include the tax return of the fund and its members. The audit fee is usually charged separately, costing around $400. SMSF administration fees vary immensely, ranging from $1,500 to $6,000 annually, depending on the investment mix.

 

Buyers Focus on Fee Size

Radar Results has revised its Price Guide for financial planning businesses and client books, reflecting the industry’s evolving dynamics. The new changes highlight the growing importance of fee size in business valuations, providing a clearer picture for buyers and sellers.

Key Changes:

Fee Size Takes Center Stage: Over the past year, fee size has become a pivotal factor in determining business value. This shift underscores the need for financial planning businesses to maintain competitive fee structures to attract potential buyers.

Revenue Multiples as a Benchmark: Sales transactions in the industry now predominantly involve multiples of recurring revenue. This recurring revenue comprises risk renewal commissions, ongoing fees for service, or a mix of both. These metrics serve as a reliable benchmark for assessing business value.

Influencing Factors for Multiples: Traditional factors that influence the multiples buyers are willing to pay include:

  • Vendor terms
  • Client locations
  • Client ages
  • Investment strategies
  • Products offered

Emerging Trends:

The latest update reveals a notable trend: fee size now significantly impacts the multiples buyers pay. Buyers are increasingly focusing on two main factors—client age and fee size. This dual approach allows for a more precise valuation using Radar Results’ Price Guide tables.

Practical Example:

Consider a scenario involving a 70-year-old retiree client who pays $6,000 annually in ongoing fees and is based in a Capital City. Here’s how the valuation plays out:

  • Age-Based Table: The multiple typically ranges from 1.9 to 2.5 times. Being in a Capital City generally results in the higher 2.5 times multiple.
  • Fee Size Table: The multiple extends from 2.6 to 3.3 times. Most sellers would anticipate a minimum multiple of 3 times or more.

This example illustrates how buyers can use the Radar Results Price Guide to calculate a blended result for each client, combining age and fee size factors for a comprehensive valuation.

Market Shift Explained:

The reasoning behind this market shift is straightforward. Over the past five years, the costs for financial planners have risen significantly, leading to higher cost-to-serve ratios. As a result, acquiring a client book with fees below the cost to serve is less attractive to buyers. Raising fees early in a new client relationship is challenging, making initial fee size a critical consideration.

In conclusion, Radar Results’ updated Price Guide provides essential insights for financial planning businesses navigating the current market landscape. By understanding these changes, buyers and sellers can make more informed decisions, ultimately driving better outcomes in business transactions.

Bob Blurton – QLD Associate – 0488 403 139 – bob@radarresults.com.au

Risk insurance clients worth more

/in /by

The demand has exceeded supply, with many buyers asking Radar Results about risk insurance client registers and businesses. Australia’s largest buyer agent for financial services, Radar Results, is looking for any financial planner or life insurance agent looking to sell; and looking at doing so right now.

The price multiple on risk insurance clients is traditionally 2.2 times annualised renewable commission and as high as 2.7 times depending on the average client age of each client. The age range that is most favoured is between 35-55 years old, and the size of the business’s annual recurring revenue is $500K-$750K. The younger the risk clients, the higher the multiple paid by our clients (the buyers).

This represents a purchase price between $1.35 million to $1.5 million based on the current price multiples of three times and on the annual recurring revenue of $500,000.

Some of Radar Results’ buyers are now asking for much higher levels of annual fees, as much as $3M per year. These risk books are harder to get but not impossible, as smaller companies are merging with larger ones. Price multiples on risk-insurance books are expected to increase from here, insulated from stock market falls.

 

Accounting practices for sale are becoming rare

Radar Results sees price multiples rising for accounting practices in the next several years. It is simply a matter of supply and demand, with fewer sellers on the market. The traditional size business sought-after by accounting firms has fees of $1-$2 million per year.

Recently, clients at Radar Results have been asking for larger accounting practices, as big as $5M. Based on the standardised Earnings Before Interest and Taxes (EBIT), a sales price of that size of accounting practice will range from $8M to $10M, using an EBIT of $2M. These size accounting practices are typically located in major cities and a few larger regional areas.

Accounting fees can include self-managed superannuation fund (SMSF) admin fees. These annual administration fees may be between $3,000 to $4,000 per SMSF account, including the auditing and tax returns. The selling price for these administration fees would be more than double the standard accounting fees. I can see that buying SMSF administration fees will cost more because the revenue is stable and they are very hard to find.

Image

July 2022

/in /by

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.

May 2020 Newsletter

/in /by

The main impact to the value of financial planning practices is from the Royal Commission Report released in Feb 2019 and the additional red tape that followed the recommendations. The banning of grandfathered trail commissions from Jan 2021 has had an immediate impact with as much as 25% of the recurring revenue from some practices disappearing. The strategy of moving these grandfathered clients to a fixed fee type client can be time-consuming and problematic, but not impossible.

The Corona Virus has not seen any substantial change in valuation multiples, whether it’s a multiple of normalised EBIT or recurring revenue. The share market crash of Feb-April 2020 has seen values diminish where the fees are connected to the Funds Under Management (FUM). Some practice revenues are down between 5% and 20% depending on the client’s exposure level to shares. 

Radar Results consultants around Australia have reported that price multiples being paid for financial planning practices have softened due to the attitude of buyers in the current environment.

Another factor that has lowered planning practices values is the number of sellers compared to buyers. It’s a buyers market and has been that way now for about 18 months. There have been thousands of planners either sacked, told to move to another licensee or given a Buyer Of Last Resort (BOLR). Further, many don’t wish to do the FASEA exam, and certainly, they don’t want to commence a 4-year University course. With the average age of planners estimated to be 60 years or over and started their careers and businesses 25 to 35 years ago, many have had enough and wish to either retire or have a sea-change.

What’s in demand

Accounting practices are in significant demand, and prices remain steady.

SMSF administration fees are now selling for around $1.50 per $1.00.

General insurance registers or businesses are also hard to find for our buyers.

Radar Results has moved up the price paid for home loan books. Like accounting businesses, Radar Results do not have enough loan books to sell.

Revenue Type Recurring Revenue Multiple
Investment and super clients (aged 80 yrs+) 0.8x to 1.0x

 

Previously 1.0x to 1.2x
Investment and super clients (aged 65 -79 yrs) 1.7x to 2.2x

 

Previously 1.8x to 2.3x
Investment and super clients (aged up to 64 yrs) 2.2x to 2.7x

 

Previously 2.3x to 2.8x
Risk clients (under 55 yrs) 2.2x to 2.7x

 

Previously 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

 

Previously Nil to 1.0x
Mortgage clients – home loan trails 1.8x to 2.5x

 

Previously 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 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 eight months to May 2020.

Grandfathered trail commission clients (Down another 33%)

/in /by

Grandfathered trail commission clients (Down another 33%)

Radar Results (Radar) had seen recent sale transactions of grandfathered trail commission clients trade between 1.5x and 2.0x the annual trail amount, but now that the Royal Commission has recommended trails cease on 1 Jan 2021, Radar Results believe the multiple has now fallen further.

These books are most likely to trade between 1.0 times and 1.5 times trails, giving buyers approximately 22 months of income. Previously these had been selling for as high as 3 times trail, but more commonly at a high of 2.7 times trail during the period 2013-2017. In 2013 these trail commissions books were sought after because no FDS (Fee Disclosure Statement) was required and the Opt-in requirement for new clients from 1 July 2013, didn’t apply. Radar Results expect a lot of grandfathered books to now come onto the market for sale.

The Royal Commission may not have explained the reasoning behind the recommended cessation of the trail commission, except to say it’s conflicted. They also feel that the financial planners have been receiving revenue without providing a service. Whilst in many situations this is correct, it’s not the situation across the industry. The Royal Commission would like the financial planners who own grandfathered clients, to make contact where possible, and try and convert them into fee-paying clients. If the grandfathered client is receiving a service already, then the trail commission needs to be changed to a fee, paid by the client and not by the product provider.

The principal of Radar Results, John Birt said, “I feel sorry for those planners who had borrowed money over the past 5 years to specifically buy grandfathered trail commission clients, thinking they would have an income for life.”

Radar Results was told that banks are not placing any value on these grandfathered clients now; basically, they do not see them as an asset. Radar Results does not hold this view, as with some effort, clients can be moved to fee paying.

New Associate for Sydney & ACT – Susannah Hart

/in /by

Radar Results has helped many financial planning practices to sell their businesses over the past 12 years. Susannah Hart has been invited to join our team to further service the Sydney and ACT market.

Susannah had been in the financial services’ industry for over 25 years with her second career starting in an Accountant’s office, then transitioning the Accountants into Financial Planning.  A RetireInvest Franchise owner and Authorised Representative, she later moved into the corporate arena as a BDM, then as State Manager with Centrepoint Alliance (previously PIS), Business Growth Manager for the MLC Dealer Groups (Garvan, Godfrey Pembroke, Apogee, Meriton, NAB FP) and more recently, Count Financial Group’s National Development Manager.

Radar Results owner and Principal, John Birt, believes that Susannah’s experience and connections will assist buyers and sellers along their respective journeys.

John Birt, Principal of Radar Results, believes that the next two years will be very active, with many financial planners considering the sale of their business in the short term. According to Birt, “Advisers are definitely looking to sell before the new educational requirements force them out of the industry, and the abolishment of grandfathered commissions is likely to speed this up.”

Highest Prices Ever

/in /by

RECESSION 2017-18

According to then Prime Minister Paul Keating, the last recession we had was ‘the one that we had to have’. During this recession, interest rates rose to 18%, loan delinquency rates hit 12% and unemployment levels hit nearly 11%.

Expectations are that we are in for another bumpy ride next year. While I’m not sure if the recession of the 90’s will be repeated, property prices are tipped to suffer.

With respect to investing, overseas fund managers have Australia on a ‘no-go list’, meaning home and apartment prices are the highest in the world when compared to our incomes. Bar New

South Wales, every state has an over-supply of dwellings, with an additional 200,000 dwellings to be completed over the coming year, and 217,000 the year after. This oversupply and failed settlements could lead to apartment prices falling by 20%. Developers need to sell the unsold stock to meet their debt obligations.

Many financial planning practices have been advising their clients to buy property, particularly within their Self-Managed Super Fund. What effect would property prices moving down 20% have on the client’s overall financial situation, and would the client have a case against the planner’s AFSL or licensee? How will a recession impact financial planners, the financial industry and more importantly their clients? Being heavily geared into just one asset class, rising interest rates, higher unemployment and lower property prices are a deadly mix. 

HIGHEST PRICES EVER

Today, prices being offered for these businesses or client registers are the highest they have been in eight years. This is primarily due to the low interest borrowing rates and finance being plentiful. AMP has just changed their Buyer of Last Resort (BOLR) formula, now placing non-AMP products in the same category for valuation as AMP products. I believe this applies to the Charter and Hillross practices as well.

AMP Bank is offering their financial planners loans to expand, some at interest rates of 7% fixed, principal and interest over 10 years, and preferably they’re being encouraged to buy non-AMP practices or client registers, and move them into the AMP practice. Once again, this includes Hillross and Charter. This high demand by AMP linked advisers is forcing up the prices paid for financial planning activities.

BABYSITTING

Another factor that has forced up prices being paid for financial planning practices is the internal need by licensees to retain their own advisers, otherwise known as ‘baby-sitting’. Some medium-to-large licensees have offered to buy the practice themselves, as a temporary hold until they can find another adviser to join their group, and then on-sell it. The existing clients and associated revenue is retained.

LOAN BOOK TRAIL PRICES RISE FURTHER

In the past three years, loan book prices have nearly doubled, with some now selling for between two and three times the trail. Some mortgage brokers have sold their trail books for over three times the trail, however, in these situations there’s a correlation between the aggregator and the loan broker, with the most sought after loan books being aligned to aggregators in PLAN, FAST, Connective, AFG and Choice. Cross-selling opportunities is the main reason for this price rise, along with low supply. So far this year, clients of Radar Results have purchased fewer than 10 trail books, but if I had 100 trail books, our clients would’ve purchased them all. Financial planners really want to buy loan books as well, and tend to outbid the mortgage brokers.[layerslider id=”1″]

ACCOUNTING PRACTICES UNDER PRESSURE

Accounting practices haven’t seen the same demand for their practices as financial planners and loan brokers have seen for their businesses. Many accounting practitioners, whether a sole practitioner or partnership, seem to have higher levels of business costs, such as salaries, and cannot pass the full effect onto their clients. These days, taxation clients are more demanding, more selective with the services they require and more critical of the value for money concept.

Accountants need to do more than just lodge tax returns. Many are under- charging, which I feel is a confidence issue. Accountants that provide advice, administration and compliance work to their SMSF clients are either over-charging by an exorbitant amount or in many situations not charging enough. The gap is enormous, with $895 per annum to do the full year’s work for a SMSF, and $8,000 per annum to do basically the same work.

Prices paid for individual tax return clients, commonly called ‘I returns’, have fallen. The main steadier for accounting practice prices is the demand by financial planners looking to reach a large number of prospects to sell loan/s, planning services, SMSF set-up and advice, along with risk insurance products.