Selling your C’s and D’s

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Thirteen years ago I doubled the value of my recurring income in a matter of weeks. After attending a Boot Camp on Financial Planning I was convinced that if I doubled my trails and provided a service to my FP clients equal to the increased trail, I would have a better business. I increased the trails from 0.375% to 0.750% and wrote out to all the clients explaining why. Naturally, I had a few phone calls but only lost one client. Actually it was a client who always complained about fees anyway, so I was quite relieved to see him go. My annual FP trail income moved from $100,000 to $200,000 overnight which allowed me to provide a lavish and pampering client service program. More referrals followed and today that business has $300M of FUM. The FUM in 1994 was zero. If you’d like to read further, I have one other tip on making life easier as a planner.

Getting rid of your C’s and D’s

The same Boot Camp Conference suggested life would be a lot easier if I didn’t have to deal with the C and CalculatorD grade clients. I might add here that my definition of C’s and D’s can be quite different to the industry’s definition. The speaker said to hire a bus, load them all on and drive them down the street to the nearest planner and give them away. I understand what they were saying but it seemed a bit graphic. These days you can sell the Cs and Ds, and sometimes, for quite good money. When I sold mine in 1995 it was such a relief. I could now concentrate on those As, the one’s who pay me the most, appreciated the service the most and referred like minded people. Allowing for execptions D’s refer D’s and A’s refer A’s.  So how do you do it – get rid of your C’s and D’s? It’s all about finding the right buyer and that’s how we can help.

Finding the Right Buyer

MagsearchFirstly, by having your C’s and D’s professionally valued, you’ll then know what price to expect. At least a ball park figure without spending any money – just a few minutes of your time. Radar Results uses many criteria when valuing C’s and D’s, all explained on our website under the Selling a Financial Planning Business tab.

It’s a free service and takes about 4 minutes to complete the online Valuation Questionnaire. We also supply the right buyer and there’s no fee to sell using our service. Any other questions just give me a call on 02 4384 5670.

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FP Practices Sold During 2007

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Last year prices paid for financial planning firms in Australia escalated. Radar Results data for 2007 revealed a high of 5.5 times recurring revenue was paid for a Brisbane CBD practice and a low of 1.8 times for a NSW country practice. The average was just over 3 times recurring revenue. The largest influence on the price paid for a FP practice was it’s location.

Supply of quality practices in capital cities still remains acutely short with Adelaide almost  barren. Perth was not far behind with buyers outstripping sellers 5 to 1.

Melbourne not only has buyers and sellers evenly matched but also had the highest level of activity last Magwithnumbersyear, accounting for over 40% of Radar Results enquiries.

Last year Brisbane started quietly but during the quarter ending December 2007 sellers started coming onto the market. Sydney, which has always been a sought after city for buyers, saw prices escalate rapidly during 2007 due to low supply. The last quarter has seen more FP practices in Sydney move to “sell mode”.

In some instances price differential between country and city prices is almost half. In many country regions there are no buyers at all. I know of practices that have been for sale for over a year and haven’t even received an offer.

Another major influence on price was the size of the practice. FUM of $20-30M were snapped up in a few weeks; $50-100M FUM was much slower with price expectations by the seller rather ambitious. Dealerships of any size were in big demand especially if the total advisers numbered more than 5 and up to 100. Their in-house platform was the driving force behind this demand together with added distribution through the larger network. A possible ASX listing has become a popular strategy together with economies of scale from merging practices.

sellbuyLooking ahead we expect around 2000 practices to change hands in the next 4 years. That’s about 10 a week; many of which may be offered first to staff and management, then the outside market. With the average age of a planner close to 60 and nearly 4 years of sustained share market growth, advisers are starting to lock in the value of their businesses now. As more sellers hit the market and supply increases, prices will fall.

Larger planning practices will benefit from merging with the smaller ones and some will list on the ASX. Eventually the smaller planning practices will basically disappear – similar to the corner store leaving monopolies like Woolworths and Coles to survive and dominate. It should be an interesting 2008.

Radar Results will be running a national business advice seminar program for financial planners “Retire or sea change?”. It will involve how to get your practice ready for sale even if you are 5 years away from that decision. The seminar will also explain what to expect from buyers and answer all those hard questions. To register your interest just click Seminar Registration send an email to Michele Conroy with your name and address and we’ll send you and invite. If you would like a valuation then click on this link Valuation and complete the 4 minute questionnaire. We’ll send you a valuation of what we think your business is worth now. Please phone me if you have any questions on 02 4384 5670.

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Financial Planning Valuations

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Last year we valued over 100 financial planning practices in Australia. If you wish to know the value of yours, please continue to the Valuation Questionnaire page. If you’re looking at expanding your planning business quickly – you can outsource this role to Radar Results. 

Finding the right Financial Planning Practice

Expanding – Starting your own Practice – Wanting to buy a client list

Many good planning practices that are for sale never come onto the market. They seem to get snapped up before you know it. Radar Results offers a confidential consulting service that locates and qualifies these planning practices just for you. We can match you perfectly with a seller. Completely outsourced, our service allows you to focus on your business and not miss out on these opportunities.

Whether you’re an employee after your own client base, small practice owner who wants more scale or a large Dealer Group wanting to grow further – Radar Results can help. Just complete our online Buyers Questionnaire and we’ll have an Acquisition Proposal to you in a few days.

 

Finding the Right Buyer or Partner

Selling – Retiring – Wanting to Merge

Firstly, by having your planning business professionally valued, you’ll then know what price to expect. At least a ball park figure without spending any money – just a few minutes of your time. Radar Results uses many criteria when valuing, all explained on our website under the Selling a Financial Planning Business tab.

It’s a free service and takes about 4 minutes to complete the online Valuation Questionnaire. During Year 2005/06 Radar Results measured the demand for financial planning practices and it was running at 4:1 Buyers to Sellers. During 2007 it changed and now we feel it’s almost even with record prices paid recently. Like shares, it’s sometimes good if you can “get out” at the top.

 
 
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