In the first quarter of 2020 we've seen a material increase in enquiry from vendors of small financial planning books seeking to sell. And it's not just Covid-19 or FASEA driving this trend.
The primary cited reason is the substantial increases in dealer group charges, with the unfortunate result that small financial planning firms are simply not financially viable.
Most dealer groups have experienced significant increases in operational costs – particularly around compliance – compounded by decreasing revenue. So we shouldn't expect the dealer group charges to go down any time soon.
Those financial planning firms who had put plans in place aimed at increasing their fee levels organically to compensate have had those plans thoroughly derailed by Covid-19. In this environment it’s more difficult than ever to grow your business, regardless of size.
What about going it alone? Unfortunately, this isn’t a real option for many practices below a certain size, since the costs of self-licensing and compliance can mean you end up with a similar outcome.
There is some good news, however.
For practice owners looking to exit there are larger firms seeking to bolster their revenue streams and shore up their profitability.
If you are in a position to sell – or if you’d like to discuss how to get there from where you are – you can call Mark Witt at Practice Exchange on 1300 722 452.
Mark Witt CA
Mark is the Head of Brokering at Business Exchange with over 20 years experience and 400+ completed transactions
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