September 2019 Price Guide

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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

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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

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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.