The Value of Your Advice Business?

Will your advice business be worth more in 12 months than it is today?

  • No (42%)
  • Yes (36%)
  • Not sure (22%)

Our latest poll asks you to consider whether the new minimum professional education standards will have an impact (either way) on the value of your advice business.

In an article we released this week, we’ve learned that risk-focussed advice businesses have retained their value over the last year, despite the lead-up and now implementation of the Life Insurance Framework reforms. The same report, however, suggests that it’s still too early to determine the extent to which those reforms and the new minimum professional education standards will impact the future value of your business (see: Life Practices Hold Value…).

So, we thought we’d ask you to venture your own opinion, based on what you know today, about the future value of the advice business you own or in which you work.

The report from Centurion Market Makers, referred to in our article this week, suggests the valuation range, based on recurring revenue, for most risk-focussed advice businesses is currently very similar to that of full-service or holistic firms.

This possible exodus would in turn have an impact on the number of businesses that may be offered for sale…

One of the critical issues that Centurion maintains will impact future business valuations is the extent to which the LIF regime and the new professional standards may drive advisers either into earlier-than-planned retirement or into another industry. This possible exodus would in turn have an impact on the number of businesses that may be offered for sale, the valuations of which would then become subject to the free market forces reaction to supply and demand.

The projected value of your business in a year from now will most likely also be impacted by a range of other factors, some of which will relate just to you and your own circumstances and others that may impact both your own business and those of your peers. So, while we appreciate the real world can be a complited place, we’re asking – all other things being equal, whether you think the impact of the LIF reforms and particularly the new minimum professional standards, will have a positive, negative or neutral impact on the value of your practice.

Tell us what you think and we’ll report back to you next week…

  • Jeremy Wright

    Over the next 12 months, most risk advisers businesses should increase in value.

    The crunch time will be from when commissions reduce further and the additional burden of increased costs and time spent learning irrelevant Investment courses that have nil bearing on how risk only specialists give advice, hits home.

    The Life Insurance Companies need to ask themselves the obvious question, which is, are you prepared and willing to see a mass exodus of experianced advisers in 3 years, which will have a major impact on Australians being able to get quality advice and products, which will further dilute the Life Insurance Industries capability to provide the appropriate mandate of being able to provide a vital service to the Australian community.

    The value of our Businesses will be dictated by the actions of Government and big Business Lobby groups whose sole focus to date has been to increase their bottom line, without looking properly at the long term consequences for everyone of their actions.

  • Brian Howard

    Well stated as usual Jeremy. I may very well be one of the advisers of which you speak. Against the background of conditions only getting harder and commissions coming down, the value of a risk-only business with reliable, non-seasonal renewal commissions and well looked-after clients will only increase if anything.
    .
    A renewal income stream like that is gold and the stability of such flys in the face of all the volatility and idiocy pervading our industry currently. If FASEA, ASIC, life companies et al don’t bring some sanity back, fix it so we riskies don’t have to do these waste-of-time-and-money irrelevant uni degrees then it will be a painful but relatively straightforward decision to sell up and retire by about 2023 I’m afraid.
    .
    Just to mention ONE thing: the 2 year clawback is an insult to advisers from the life companies who did not fight this FOR THEIR advisers in this respect. Simply no excuse for what they DID’NT do there. They still say they are committed to our support – how is a 2 year clawback a representation of that support? Please explain Pauline??!! Don’t like it but that’s the way it is thanks to these attention seeking, self serving industry bodies and academics controlling our once great industry now. It isn’t fun anymore like it was before and that means a lot to me and many other advisers.